Question

Match the following:

• A. A-(ii), B-(iii), C-(iv), D-(i)
• B. A-(iv), B-(iii), C-(i), D-(ii)
• C. A-(ii), B-(i), C-(iv), D-(iii)
• D. A-(i), B-(iv), C-(ii), D-(iii)

Hint:

Remember: Partner’s salary and interest on drawings go to Appropriation Account; manager’s salary and commissions go to Profit \& Loss Account.

Answer 1

The Correct Option is C

- (A) - (ii): Partner's salary is treated as an appropriation of profit, thus it is debited to the Profit and Loss Appropriation Account, not the general Profit and Loss Account.
- (B) - (i): Manager's salary is considered an operating expense and therefore charged to the Profit and Loss Account.
- (C) - (iv): Interest on drawings represents income for the firm and is credited to the Profit and Loss Appropriation Account.
- (D) - (iii): Commission received is recognized as income and credited to the Profit and Loss Account.