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If in profit distribution A receives a commission equal to 5% of the total profit and the total profit is ₹40,000, what is A's commission?

Answer and explanation

Correct answer: Two thousand rupees

The commission is calculated on the total profit. A's commission = 5% of ₹40,000 = \(0.05\times 40000=2000\), so the correct amount is two thousand rupees. A common distractor is four thousand rupees, which would correspond to 10% and is therefore incorrect. Exam tip: always apply the given percentage to the stated base (here total profit), not to partners' capitals or shares unless specified.

Related tags

Partnership AccountsProfit DistributionCommissionNumericalEasyPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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