The Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm, Which, among the following, is not shown in the Profit and Loss Appropriation Account?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → All adjustments in respect of payment to Vendor.
The Profit and Loss Appropriation Account starts from the net profit and shows how it is shared among the partners: their salary, commission, interest on capital and interest on drawings. A payment to a vendor (a supplier of goods or assets) is a business transaction with an outsider; it is settled through the Vendor's account and the Bank account, and never through the appropriation of partners' profit.
Option (1) All adjustments in respect of partner's salary. — Shown in the Appropriation Account. It is an appropriation of profit to a partner.
Option (3) All adjustments in respect of interest on capital — Shown in the Appropriation Account. It is debited there and credited to the partners.
Option (4) All adjustments in respect of interest on drawings — Shown in the Appropriation Account. It is credited there, as it adds to the profit to be shared.
NCERT (2026-27 edition): |