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Profit is Rs 270,000. Reserve is 10% and A's commission is 8% on the profit remaining after reserve. What is A's commission?

Answer and explanation

Correct answer: Rs 19,440

Step 1: Calculate the reserve: Reserve = 10% of ₹270,000 = ₹27,000, i.e. \(270000\times10\%=27000\).
Remaining profit = ₹270,000 − ₹27,000 = ₹243,000.
A's commission = 8% of the remaining profit = \(243000\times8\%=19440\). Thus the commission is ₹19,440.
Closest distractor: option B (₹21,600) arises from incorrectly taking 8% of the total profit (\(270000\times8\%=21600\)), but the commission must be on profit after reserve.
Exam tip: apply percentages in the correct order — subtract reserves/appropriations first, then compute commission or profit shares on the remainder.

Related tags

Partnership AccountsProfit DistributionReserveCommissionPercentage-CalculationPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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