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If net profit is ₹90,000 and A is entitled to a commission of 10% before charging the commission, what is A’s commission?

Answer and explanation

Correct answer: ₹9,000

The governing concept is the distinction between commission calculated before and after charging commission. When commission is stated as a percentage of profit before charging commission, the given profit is the base. Therefore, A’s commission = 10% of ₹90,000 = 10/100 × ₹90,000 = ₹9,000. Hence option A is correct. The after-commission formula would be rate ÷ (100 + rate) × profit, which is not applicable here; that method would produce about ₹8,182 and explains option B as a plausible distractor. Option C uses an incorrect base or rate, and option D treats the entire profit as commission. The wording clearly says ‘before charging commission,’ so direct multiplication is required.

Related tags

CommissionBefore ChargingProfit DistributionNumericalPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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