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Maharashtra State Board · HSC Commerce · Class 12 (Std XII)

Class 12 Maths and Statistics Part 2 Chapter 1: Commission, Brokerage and Discount

Short notes, key concepts, quick revision and practice MCQs with answers

Middlemen such as agents, brokers and auctioneers earn commission or brokerage. Sellers allow trade and cash discounts, and bills of exchange are discounted with banks. The chapter covers commission, del credere, brokerage, trade and cash discount, present worth and true discount, and banker's discount and banker's gain on bills.

Key concepts: Commission, Brokerage and Discount

Agent and commission
An agent carries out sales or purchases for a principal and is paid a commission, usually a percentage of the value of the goods handled.
Del credere commission
Extra commission paid to an agent who guarantees the recovery of credit sales, i.e. bears the risk of bad debts.
Brokerage and auctioneer
A broker brings buyers and sellers together; his remuneration is brokerage. An auctioneer sells goods by public auction and earns commission on the sale proceeds.
Trade and cash discount
Invoice price = list (catalogue) price − trade discount. Net selling price = invoice price − cash discount (allowed for prompt payment). Profit = N.S.P. − C.P.
Present worth and true discount
Sum due (S.D.) = present worth (P.W.) + true discount (T.D.). T.D. = P.W. × n × r/100, the interest on the present worth for the period.
Bills of exchange
The drawer draws the bill on the drawee for its face value. The nominal due date is the end of the period; adding 3 days of grace gives the legal due date.
Banker's discount and cash value
B.D. = S.D. × n × r/100 (interest on face value from the date of discounting to the legal due date). Cash value = S.D. − B.D.
Banker's gain
B.G. = B.D. − T.D. = T.D. × n × r/100 (interest on true discount). B.D. is always greater than T.D.

Quick revision: important points

Practice MCQs with answers

  1. An agent sells goods worth ₹50,000 at 4% commission. His commission is:

    1. ₹200
    2. ₹2,000
    3. ₹4,000
    4. ₹20,000
    Show answer

    Answer: B. ₹2,000
    4% of 50000 = 2000.

  2. Del credere commission is paid to an agent for:

    1. Advertising
    2. Guaranteeing the recovery of credit sales
    3. Transport of goods
    4. Storing goods
    Show answer

    Answer: B. Guaranteeing the recovery of credit sales
    The agent bears the risk of bad debts.

  3. An agent charges 10% commission plus 2% del credere. On sales of ₹37,200 he earns:

    1. ₹3,720
    2. ₹4,464
    3. ₹744
    4. ₹4,092
    Show answer

    Answer: B. ₹4,464
    12% of 37200 = 4464.

  4. A wholesaler allows 25% trade discount and 5% cash discount on an article marked ₹1,600. The net price is:

    1. ₹1,120
    2. ₹1,140
    3. ₹1,200
    4. ₹1,080
    Show answer

    Answer: B. ₹1,140
    1600 × 0.75 = 1200, then 1200 × 0.95 = 1140.

  5. Invoice price equals:

    1. List price + trade discount
    2. List price − trade discount
    3. Cost price + profit
    4. List price − cash discount
    Show answer

    Answer: B. List price − trade discount
    Trade discount is deducted from the list price.

All Class 12 Maths and Statistics chapters

Class 12 Maths and Statistics notes: all chapters