Question

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

• A. Interest on Capital
• B. Interest on Drawings
• C. Rent paid to partners
• D. Partner’s Salary

Hint:

Understand the difference between appropriation items (related to profit sharing) and expense items (recorded in the Profit and Loss Account).

Answer 1

The Correct Option is C

The Profit and Loss Appropriation Account records items related to the appropriation of profits among partners, such as interest on capital, interest on drawings, partner’s salary, and partner’s commission. Rent paid to partners is treated as an expense and recorded in the Profit and Loss Account.