Identify the correct sequence of dealing with the following in the context of partnership.
(A) Salary of employee
(B) Interest on Capital of Partners
(C) Transfer of Divisible Profit to Partners Capital
(D) Transfer of Net Profit to Profit and Loss appropriation A/c
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (D), (B), (C)
(A) Salary of employee – an expense charged in the Profit and Loss Account, before net profit is found.
(D) Transfer of Net Profit to Profit and Loss Appropriation A/c – the Appropriation Account starts with the net profit as per the Profit and Loss Account.
(B) Interest on Capital of Partners – debited to the Appropriation Account as an appropriation of that profit.
(C) Transfer of Divisible Profit to Partners Capital – the balance left after all appropriations is shared among the partners last.
NCERT (2026-27 edition): NCERT (2026-27 edition):
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