Arrange the following in the context of Accounting for partnership.

A. Preparation for Trading and Profit and Loss Account.
B. Calculation of divisible profit or Loss.
C. Preparation of profit and loss Appropriation Account.
D. Preparation of Balance Sheet.
E. Preparation of partners' capital Account.

Choose the correct answer from the given below:

A, C, B, E, D

The correct answer is Option (1) → A, C, B, E, D.

The correct sequence for accounting in a partnership is-

A: Preparation of Trading and Profit and Loss Account – First, you need to prepare the Trading and Profit and Loss Account to determine the overall profit or loss for the partnership.

C: Preparation of Profit and Loss Appropriation Account – After calculating the profit or loss, the next step is to take the net profit or loss from the Profit and Loss Account and prepare profit and loss appropriation account. So, Net profit is transferred from the profit and loss account to the profit and loss appropriation account. All appropriations like interest on capital, salary to partners are provided to partners. The remaining profit after the appropriations is divisible profit.

B: Calculation of Divisible Profit or Loss – This refers to determining the portion of the profit (or loss) that can be divided between the partners after appropriating for things like salaries, interest on capital, etc. in their profit sharing ratio.

E: Preparation of Partners' Capital Account – This account reflects each partner's initial capital contribution, any adjustments (drawings, interest on capital), and their final capital balance after profit or loss allocation.

D: Preparation of Balance Sheet – This final statement presents the firm's financial position at a specific date. It shows the total assets, liabilities, and capital (including the final capital balances from the Partner's Capital Accounts).