Arrange the following steps in correct sequence.

(A) Appropriation of profit like Interest on capital
(B) Charge against profit
(C) Distribution of profits among the partners
(D) Transfer to General Reserve as a part of Divisible profits
(E) Calculation of Net profit

Choose the correct answer from the options given below :

(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 partnership firm 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. All appropriations like interest on capital, salary to partners are provided to partners. The remaining profit after the appropriations is divisible profit.

(D) Transfer to General Reserve as a part of Divisible profits- After debiting and crediting all relevant items to the profit and loss appropriation account remaining profit is divisible profit. A part of the divisible profit is transferred to the general reserve.

(C) Distribution of profits among the partners- Remaining profit after transferring to the general reserve is distributed between partners in their profit sharing ratio.