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Question
Assertion (A): Commission provided to the partner is shown in the Profit and Loss A/c.
Reason (R): Commission provided to the partner is charge against profits and is to be provided at a fixed rate.
Options
(A) is correct but (R) is wrong.
Both (A) and (R) are correct, but (R) is not the correct explanation of (A).
Both (A) and (R) are incorrect.
Both (A) and (R) are correct, and (R) is the correct explanation of (A).
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Solution
Both (A) and (R) are incorrect.
Explanation:
Commission provided to a partner is not shown in the Profit and Loss Account because it is not a charge against profit. Instead, it is treated as an appropriation of profit and is therefore shown in the Profit and Loss Appropriation Account. Also, the reason is wrong because a commission to a partner is not a charge against profits and is not necessarily provided at a fixed rate; it is allowed only if specifically mentioned in the partnership deed. Thus, neither the statement nor the reason is correct.
