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A is guaranteed minimum profit of Rs 40000 and his normal share is Rs 34000. What will be the deficiency?

Answer and explanation

Correct answer: Rs 6,000

The governing concept is deficiency under a minimum-profit guarantee. Deficiency is calculated as guaranteed minimum profit minus the partner’s normal share. Therefore, deficiency = Rs 40,000 − Rs 34,000 = Rs 6,000. Option A is correct. Rs 74,000 is the sum, Rs 40,000 is only the guaranteed amount, and zero would be possible only if the normal share equalled or exceeded the guarantee.

Related tags

Minimum GuaranteeDeficiencyProfit DistributionPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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