Commission of a partner is shown in the .............. of the partnership firm.

Profit and Loss Appropriation A/c

The correct answer is option 2- Profit and Loss Appropriation A/c.

Commission of a partner is shown in the Profit and Loss Appropriation A/c of the partnership firm.

Partner’s commission is an appropriation of profit, not an expense. Hence, it is shown in the Profit and Loss Appropriation Account, which is prepared after the Profit and Loss Account. The following journal entry is passed for Partner’s Commission:

(a) For crediting commission allowed to a partner, to partner’s capital account:
Commission to Partner A/c Dr.
       To Partner’s Capital/Current A/c’s (individually)

(b) For transferring commission allowed to partners to Profit and Loss Appropriation Account.
Profit and Loss Appropriation A/c Dr.
         To Commission to Partners Capital/Current A/c