Home › Karnataka PUC II › accountancy › partnership_basics › Which item is treated as an APPROPRIATION of pro…
Which item is treated as an APPROPRIATION of profit (debited to the Profit & Loss Appropriation Account) rather than as a charge against profit?
ASalary paid to outside employees
BInterest on a partner's LOAN to the firm
CRent paid to a partner for use of their premises
DInterest on partners' CAPITAL when expressly allowed by the deed
Answer & Solution
Correct answer: D. Interest on partners' CAPITAL when expressly allowed by the deed
Interest on capital, partner salaries / commissions are appropriations of profit. Interest on partner's loan and rent paid to a partner are charges (debited to P&L A/c), and outside salaries are normal business expenses.
Related questions
If the partnership deed is silent about interest on partners' capital, thenWhich statement about a partnership firm's legal status is CORRECT?Which of the following is NOT an essential feature of a partnership?If a partner gives a loan to the firm and the deed is silent on interest, the partner is eAs per the Companies Act 2013 read with the prescribed Rules, what is the maximum number oIf the partnership deed is silent on profit-sharing ratio, profits and losses are sharedPartnership is defined in which Indian statute?