Determine the partner's commission from these details: Net profit before commission is 65,000, and the partner's commission is calculated @ 11% after charging such commission.
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Answer: A. 6441
Explanation
Commission calculated after charging such commission uses a specific fractional formula. The formula multiplies net profit by the rate divided by one hundred plus the rate. Calculating sixty-five thousand times eleven over one hundred eleven yields 6,441. Manager or partner commissions can be stipulated before or after deducting the commission. After charging wording means the commission itself forms part of the deductible base. Algebraic rearrangement derives the standard percentage formula used in accounting.
Partnership deeds must be interpreted carefully to apply correct remuneration formulas. Accurate computations ensure fair profit distribution among business partners. Auditors verify these calculations during year-end financial statement reviews. Option B is incorrect because 5,431 does not match the correct mathematical formula. Option C is wrong since 7,654 represents a calculation before charging commission. Option D is incorrect because 9,876 is an arbitrary figure without formula backing.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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