The deed states that first 30% of the total profit is to be transferred to reserve and then A is to be paid 8% commission on the remaining profit. If the total profit is Rs 5,00,000, what is A's commission?

Correct answer: Rs 28,000

Core concept: Commission is payable on the remaining profit after the reserve is set aside, so deduct reserve first. Calculation: Reserve = 30% of Rs 500,000 = Rs 150,000. Remaining profit = Rs 500,000 − Rs 150,000 = Rs 350,000. A's commission = 8% of Rs 350,000 = 0.08×350,000 = Rs 28,000. Why other options are wrong: option B (Rs 40,000) is a common mistake—calculating 8% on the total profit instead of on the remaining profit. Exam tip: always follow the order of appropriation given in the deed before computing any percentage-based allowances.