Question

The commission due to a partner is closed by ______.

Options

• Debiting it to Partner’s Capital A/c

• Crediting it to Partner’s Capital A/c

• Debiting it to Profit and Loss Appropriation A/c

• Crediting it to Profit and Loss Appropriation A/c

Answer 1

The commission due to a partner is closed by debiting it to Profit and Loss Appropriation A/c.

Explanation:

A partner’s commission is an appropriation of profit, not a business expense. So the commission account is closed by transferring it to the Profit and Loss Appropriation Account.