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A guaranteed partner’s actual share of profit is ₹20,000, while the guaranteed minimum is ₹18,000. How much will the partner receive?

Answer and explanation

Correct answer: ₹20,000

The governing concept is that a profit guarantee establishes a minimum receipt, not a fixed amount that replaces the actual profit share. The partner receives the higher of the actual share and the guaranteed minimum. Here, the actual share is ₹20,000 and the guarantee is ₹18,000. Since ₹20,000 is already greater than ₹18,000, no deficiency arises and the partner receives ₹20,000. Therefore option B is correct. Option A treats the guarantee as an exact payment and ignores the higher actual entitlement. Option C is only the difference between the two amounts, not the amount received. Option D incorrectly adds the actual share and guarantee. The comparison ₹20,000 > ₹18,000 is sufficient to settle the answer.

Related tags

Guaranteed ProfitActual ShareProfit DistributionNumericalPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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