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:

Appropriation accounts handle items that are adjustments of profits among partners, not regular business expenses like rent.

Answer 1

The Correct Option is C

The Profit and Loss Appropriation Account is used for items such as interest on capital, interest on drawings, partner's salary, and share of profit or loss. Rent paid to partners is treated as a business expense and is debited to the Profit and Loss Account, not the Appropriation Account.