Accountancy Part AAccounting for Partnership

Match List – I with List – II. List - I List - II (A) Interest on par…

Match List – I with List – II.

List - I	List - II
(A) Interest on partner's loan	(I) Profit and Loss Appropriation A/c
(B) Personal account	(II) Balance Sheet
(C) Position statement	(III) Capital Account
(D) Commission to a partner	(IV) Profit and Loss Account

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A)-(IV), (B)-(III), (C)-(II), (D)-(I)

A partner is paid in two capacities: as a lender (a charge on profit) and as an owner (an appropriation of profit).

(A) Interest on partner’s loan — this matches (IV) Profit and Loss Account. It is a charge against profit, debited even when there is a loss.

(B) Personal account — this matches (III) Capital Account. A partner’s capital account is a personal account, kept in his name.

(C) Position statement — this matches (II) Balance Sheet. The balance sheet shows the financial position on a date.

(D) Commission to a partner — this matches (I) Profit and Loss Appropriation A/c. Commission is an appropriation passed through this account.

NCERT (2026-27 edition):
Distribution of Profit among Partners

Extract from the NCERT textbook

NCERT (2026-27 edition):
Codification of Accounts – “The coding scheme of Account-heads should be such that it leads to grouping of accounts at various levels so as to generate Position Statement (Balance Sheet) and Statement of Profit and Loss (Profit-Loss Account).”

NCERT (2026-27 edition):
Profit and Loss Appropriation Account – “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.”