Choose the correct option from the following regarding sequencing of items given below:

(A) Salary to employee
(B) Partner's salary
(C) Net profit
(D) Divisible profit
(E) Manager's Commission

Choose the correct answer from the options given below.

(A), (E), (C), (B), (D)

The correct answer is Option (3) - (A), (E), (C), (B), (D).

(A) Salary to employee- It is a charge against profit. It is debited to profit and loss account to calculate the net profit of the year of the firm.

(E) Manager's Commission- It is a charge against profit. Manager commission is calculated on net profit. Net profit comes out by debiting all the charges to profit and loss account.

(C) Net profit- It is calculated by preparing profit and loss account. Net profit comes out by charging all expenses to the debit side of profit and loss account.

(B) Partner's salary- It is an appropriation of profit and payable to partner from the net profit. It is credited to partner by preparing profit and loss appropriation account.

(D) Divisible profit- It is calculated by preparing profit and loss appropriation account. After giving partners their salary, interest on capital etc, the remaining profit becomes divisible profit. This divisible profit will be distributed between partners in their profit sharing ratio.