The minimum guaranteed amount shall be paid to the new partner when his share of profit as per the profit sharing ratio:
- Ais more than the guaranteed amount
- Bis less than the guaranteed amount
- Cis equal to the guaranteed amount
- Dis not guaranteed by anyone
Solution & Step-by-step Explanation
A guarantee of profit means a partner is assured a minimum fixed share of profits. If their computed share based on the regular profit-sharing ratio falls below this guaranteed minimum, the deficiency is covered and paid out to them by the guaranteeing partner(s) or the firm. If their calculated share is higher than the minimum guaranteed threshold, they receive their actual higher calculated share.