Following are considered as appropriations out of profits.

(A) Rent paid to partners

(B) Interest on capital

(C) Salary paid to partners

(D) Commission allowed to partners

Choose the correct answer from the options given below:

(B), (C) and (D) only

The correct answer is option 1- (B), (C) and (D) only.

Rent paid to partners is a charge against profit. All other items are appropriation of profit.

Rent paid to partners is a charge against profit. Debiting the Profit and Loss Account indicates an expense for the business which reduces the net profit of the firm.

Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm. It shows how the profits are appropriated or distributed among the partners. All adjustments in respect of partner’s salary, partner’s commission, interest on capital, interest on drawings, etc. are made through this account. It starts with the net profit/net loss as per Profit and Loss Account.