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:

(B), (A), (D), (C)

The correct answer is option 3- (B), (A), (D), (C).

(B) Prepare Profit and Loss Appropriation Account as usual  to find out the profit available for distribution.

(A) Divide the profit in the profit-sharing ratio- Profits are distributed between partners in their given ratio.

(D) find the deficiency- Compare the actual share of profit of the guaranteed partner with the guaranteed amount and calculate the deficiency, if any.

(C) deduct the deficiency from the guaranteeing partner and add the same to guaranteed partner- Deduct the deficiency from the guaranteeing partner(s) and add it to the guaranteed partner’s share so that guaranteed profit is given to partner as per agreement.