The deed says first create twenty percent reserve and then give A ten percent commission on remaining profit. Profit is Rs 200,000. What is the commission?

Correct answer: Rs 16,000

The governing concept is that the order of appropriations specified in the partnership deed must be followed. The reserve is created first, so calculate 20% of the total profit of Rs 200,000: 20/100 × Rs 200,000 = Rs 40,000. The profit remaining for A’s commission is therefore Rs 200,000 − Rs 40,000 = Rs 160,000. A’s commission is 10% of this remaining profit, so commission = 10/100 × Rs 160,000 = Rs 16,000. Hence option A is correct. Option B applies the commission percentage to the original profit before creating the reserve. Option C uses neither the stated sequence nor a valid calculation, while option D results from subtracting an incorrect amount.