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:

Remember that all items affecting partner remuneration and interest belong to the Profit and Loss Appropriation Account, while rent paid to partners is an expense.

Answer 1

The Correct Option is C

The Profit and Loss Appropriation Account is used to appropriate profits among partners. Items like interest on capital, interest on drawings, and partner’s salary are recorded in this account. However, rent paid to a partner is considered an expense and is recorded in the Profit and Loss Account, not in the Profit and Loss Appropriation Account.