Which of the following are charges against profits?

(A) Rent paid to partners

(B) Interest on loan, paid to partners

(C) Interest on Capital

(D) Manager's commission

Choose the correct answer from the options given below:

(A), (B) and (D) only

The correct answer is option 1- (A), (B) and (D) only.

Except (C) Interest on Capital, all other are charge against profits. Interest on capital is an appropriation of profit.

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. It starts with the net profit/net loss as per Profit and Loss Account.

Charge against items are debited to profit & loss account whether there is profit or not.