Question

textit{Assertion (A)}: Partners' salary is debited to Profit and Loss Appropriation Account and not to Profit and Loss Account.
\textit{Reason (R)}: Partners' salary is an appropriation of profit, it is not a charge against profits.
Choose the correct option from the following:

• A. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are correct, but Reason (R) is \textit{not} the correct explanation of Assertion (A).
• C. Assertion (A) is correct, but Reason (R) is incorrect.
• D. Both Assertion (A) and Reason (R) are incorrect.

Hint:

Items like interest on capital, salary to partners, and profit sharing are appropriations, not expenses — hence appear in the Appropriation Account.

Answer 1

The Correct Option is A

Partner salaries are distributions of profit, not expenses. Therefore, they are debited to the Profit and Loss Appropriation Account.
The assertion is valid. The reason accurately explains that partner salaries are appropriations, not charges to the Profit and Loss Account. Consequently, both the assertion and reason are correct, with the reason providing a valid explanation.
Final Answer: (A)