Question

The steps in the Process of Preparing Profit and Loss Appropriation account are :
(A) Transfer the net profit to the credit side of P and L Appropriation A/c
(B) Divide the Profit among partners in the Profit Sharing ratio
(C) Ascertain net profit after providing for all charges
(D) Debit the P and L Appropriation A/c with all appropriations like partners salary etc.
(E) Credit the P and L Appropriation A/c with interest on drawing and deficiency on account of partner’s guarantee of earnings to the firm.
Choose the correct answer from the options given below :

• A. (A), (B), (C), (D), (E)
• B. (C), (A), (D), (E), (B)
• C. (B), (C), (E), (A), (D)
• D. (B), (C), (D), (A), (E)

Hint:

"Keep everything aligned with account, from balance transfer, charging , adjustments, it's key."

Answer 1

The Correct Option is B

Process of Preparing PandL Appropriation Account: This is a logical accounting process to show how profits are distributed among partners.
Ascertain Net Profit (C): You have to ascertain net profits first to be able to account for all charges.
Transfer Net Profit to PandL Appropriation (A): From Net profit now transfer, to credit in profits and loss A/c.
Debit the PandL Appropriation A/c (D): After, transferring deduct all expenses that involve the process.
Credit PandL Appropriation A/c with interest on drawing and Deficiency (E): This step has to be done after expenses, credit it in profits.
Divide the Profit among partners (B): With every data by side now, divide the profit with partners.
Therefore the correct is: (C), (A), (D), (E), (B)