In the case of guarantee of profit the Sequence of steps to be Followed are.
(A) divide the profit in the given ratio
(B) prepare profit and loss appropriation account as usual
(C) deduct the deficiency from the guaranteeing partner and add the same to guaranteed partner
(D) find the deficiency
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B), (A), (D), (C)
A guarantee of minimum profit is worked out only after the normal division of profit shows how much the guaranteed partner falls short.
(B) Prepare profit and loss appropriation account as usual — the divisible profit is found first, after interest on capital, salaries and other appropriations.
(A) Divide the profit in the given ratio — each partner’s share is worked out, including the share of the partner who has the guarantee.
(D) Find the deficiency — the guaranteed amount minus that partner’s actual share; this can be known only after (A).
(C) Deduct the deficiency from the guaranteeing partner and add the same to guaranteed partner — the shortfall is borne by the partner(s) who gave the guarantee, so this comes last.
NCERT (2026-27 edition):
|
