Match List I with List II in context of partnership firm.
| LIST I |
LIST II |
| A) Rent paid to partner | I)Appropriation of profit |
| B) Salary to partner | II) 6% p.a. |
| C) Interest on partner's loan | III) Charge against profit |
| D) Oral agreement | IV) Valid |
Choose the correct answer from the given below options.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- A-III, B-I, C-II, D-IV.
| LIST I |
LIST II |
| A) Rent paid to partner | III) Charge against profit |
| B) Salary to partner | I) Appropriation of profit |
| C) Interest on partner's loan | II) 6% p.a. |
| D) Oral agreement | IV) Valid |
* Rent paid to a partner is an expense for the firm that is why it is charged to the profit & loss account.
* Salary to a partner is an appropriation of partner that is why it is debited to the profit and loss appropriation account. It is provided only if the appropriation is less than the available profit.
* Interest on partner's loan is provided @ 6%p.a. in absence of any agreement.
* The oral agreement is equal valid as written agreement. It depends on the firm whether to have written agreement or oral agreement. It is better to have written agreement in order to avoid any disputes in future.