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:

(A), (D), (B), (C)

The correct answer is Option 1 - (A), (D), (B), (C).

(A) Salary of employee- It is expense for the firm so it debited to profit and loss account to calculate the net profit which will be later transferred to profit and loss appropriation account.

(D) Transfer of Net Profit to Profit and Loss appropriation A/c- After debiting salary to employee, net profit comes out which is transferred to credit side of profit and loss appropriation account.

(B) Interest on Capital of Partners- Interest on partner's capital is an expense for the firm and gain for the partner so it is debited to the profit and loss appropriation account.

(C) Transfer of Divisible Profit to Partners Capital- After debiting I.O.C or anything else the remaining profit is divisible profit which will be transferred to the partners capital account in their profit sharing ratio.