Arrange the following in sequence of the final Accounts for a Partner…

Arrange the following in sequence of the final Accounts for a Partnership firm.

(A) Profit and Loss Account

(B) Partner's Capital Account

(D) Balance Sheet

(E) Profit and Loss Appropriation Account

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 1

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

Final accounts of a partnership are prepared in the order in which each result feeds the next:

(C) Trading Account — comes first; it finds the gross profit.
(A) Profit and Loss Account — takes the gross profit and finds the net profit.
(E) Profit and Loss Appropriation Account — distributes the net profit after interest on capital, salary, commission and interest on drawings.
(B) Partner’s Capital Account — receives each partner’s share of profit and the appropriation items.
(D) Balance Sheet — comes last; it shows the closing capital balances with the assets and liabilities.

NCERT (2026-27 edition):
Distribution of Profit among Partners – “… You know that in the case of sole partnership the profit or loss, as ascertained by the profit and loss account is transferred to the capital account of the proprietor. In case of partnership, however, certain adjustments such as interest on drawings, interest on capital, salary to partners, and commission to partners are required to be made. For this purpose, it is customary to prepare a Profit and Loss Appropriation Account of the firm and ascertain the final figure of profit and loss to be distributed among the partners, in their profit sharing ratio.”

NCERT (2026-27 edition):
Summary – “… There is not much difference in the final accounts of a sole proprietary concern and that of a partnership firm except that in case of a partnership firm an additional account called Profit and Loss Appropriation Account is prepared to show distribution of profit and loss among the partners.”

NCERT (2026-27 edition):
Fixed Capital Method – “… While the partners’ capital accounts shall always appear on the liabilities side in the balance sheet, the partners’ current account’s balance shall be shown on the liabilities side, if they have credit balance and on the assets side, if they have debit balance.”