Which item is shown in the profit and loss appropriation account rather than the profit and loss account?
AOffice expenses of the firm
BSalary paid to the office staff
CInterest paid on a bank loan
DSalary allowed to a partner
Answer & Solution
Correct answer: D. Salary allowed to a partner
1. The profit and loss account records the business expenses and incomes of the firm.
2. The profit and loss appropriation account instead shows how the resulting profit is divided among the partners.
3. Office expenses, staff salary and bank loan interest are all ordinary business charges and belong to the profit and loss account.
4. Salary allowed to a partner is an appropriation of profit, so it is debited to the profit and loss appropriation account.
5. The same logic covers interest on partners' capital and partners' commission.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 3 "Accounts of Partnership Firms - Fundamentals", §3.11_
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