Question

If a partner is given salary and commission, how are these shown in the accounts?

• A. Credited to the partner’s capital account
• B. Debited to the Profit and Loss Account
• C. Debited to the Profit and Loss Appropriation Account
• D. Debited to the Realization Account

Hint:

Salary and commission given to a partner are treated as expenses for the firm and are shown in the Profit and Loss Appropriation Account. These amounts are credited to the partner's capital account.

Answer 1

The Correct Option is C

When a partner receives a salary or commission, these are integrated into the profit-sharing mechanism and are reflected in the Profit and Loss Appropriation Account.
- Partner salaries and commissions are debited from the Profit and Loss Appropriation Account.
- The corresponding credit is recorded in the respective partner's capital account.
The journal entry is as follows: Profit and Loss Appropriation Account Dr. Salary and Commission to Partner To Partner’s Capital Account