Practicing Success
Practicing Success
CUET Preparation Today
| Assertion: Rent to a partner is transferred to the debit of Profit and Loss Account but is not transferred to the debit of Profit and Loss Appropriation Account. Reasoning: Rent to a Partner is an expense that is a charge against profits and not an appropriation of profit. |
Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A. Assertion (A) is true but Reasoning (R) is not correct. Assertion (A) is not true but Reasoning (R) is correct. |
| Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. |
| Profit and Loss Appropriation Account is 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. Rent to a partner is not an appropriation of profit but a charge against profit. So, rent paid to a partner will be transferred to the P and L A/c. Therefore, both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. |
