Which of the following is not a charge against profit?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Interest on Partner's Capital.
Interest on Partner's Capital is an appropriation of profit. It is debited to profit and loss appropriation account and credited to partner's capital account.
OTHER OPTIONS
- Manager's Commission is a charge against profit because it is an expense incurred in the course of running the business.
- Rent to partner is also a charge against profit, as it is an expense paid to the partner for using their property for the business.
- Interest on Loan is a charge against profit as it represents an expense for borrowing funds.