alleryStart learning →The profit and loss appropriation account is which type of account?
AA real account of the firm
BA personal account of partners
CA memorandum statement only
DA nominal account in nature
Answer & Solution
Correct answer: D. A nominal account in nature
1. The textbook describes the profit and loss appropriation account as an extension of the profit and loss account.
2. It is prepared to adjust the amounts due to and due from the partners.
3. The book states that it is nominal account in nature.
4. It is credited with net profit and interest on drawings, and debited with interest on capital, partners' salary and commission.
5. The balance is then transferred to the partners' capital or current accounts in the profit sharing ratio.
_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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