Practicing Success
Arrange the following steps in correct sequence. (A) Appropriation of profit like Interest on capital Choose the correct answer from the options given below : |
(B), (E), (A), (D), (C) (B), (A), (C), (D), (E) (B), (D), (E), (A), (C) (B), (A), (D), (E), (C) |
(B), (E), (A), (D), (C) |
The correct answer is Option (1) - (B), (E), (A), (D), (C). (B) Charge against profit- All charges against profit are debited to the profit and loss account as they are expense of the firm and are to debited whether the company earns profit or not. (E) Calculation of Net profit- After all charges to the profit and loss account, net profit is calculated. (A) Appropriation of profit like Interest on capital- Net profit is transferred from the profit and loss account to the profit and loss appropriation account. (C) Distribution of profits among the partners- Remaining profit after transferring to the general reserve is distributed between partners in their profit sharing ratio. |