Question

Guarantee given to partner ‘A’ by the other partners ‘B and C’ means:

Options

• In case of loss, ‘A’ will not contribute towards that loss.

• In case of insufficient profits, ‘A’ will receive only the minimum guarantee amount.

• In case of loss or insufficient profits, ‘A’ will withdraw the minimum guarantee amount.

• All of the above.

Answer 1

In case of loss or insufficient profits, ‘A’ will withdraw the minimum guarantee amount.

Explanation:

A partner is entitled to a minimum guaranteed profit only if the firm earns some profit, even if it’s insufficient. If the firm incurs a loss, no partner is entitled to a guaranteed profit.