Which one of the following is not an item of appropriation in the par…

The correct answer is Option (3) → Interest on Loan from partner

Items of appropriation are what partners get as owners, out of profit: interest on capital, salary and commission to partners. Interest on a loan given by a partner is paid to him as a lender; it is a charge against profit, debited to the Profit and Loss Account and payable even when there is a loss.

Option (1) Interest on capital — An item of appropriation. It is allowed only out of profit, through the Profit and Loss Appropriation Account.

Option (2) Commission to partner — An item of appropriation. It is a reward to a partner as owner, debited to the Appropriation Account.

Option (4) Salary to partner — An item of appropriation. It too is passed through the Appropriation Account, not the Profit and Loss Account.