Question

Which of the following items is not dealt with through Profit and Loss Appropriation Account?

Options

• Interest on Partner’s Loan

• Partner’s Salary

• Interest on Partner’s Capital

• Partner’s Commission

Answer 1

Interest on Partner’s Loan

Explanation:

Interest on Partner’s Loan is not dealt with through the Profit and Loss Appropriation Account because it is a charge against profit. It is debited to the Profit and Loss Account and is payable even if there is a loss.

However, Partner’s Salary, Interest on Partner’s Capital, and Partner’s Commission are appropriations of profit and are recorded in the Profit and Loss Appropriation Account.