Profit and loss Appropriation A/c includes:

A. Interest on capital
B. Interest on drawing
C. Partner's salary
D. Rent to partners
E. Interest on outsider's loan

Choose the correct answer from the options given below:

A, B and C only

The correct answer is Option 1- A, B and C only.

In a partnership, additional adjustments need to be made, such as interest on drawings, interest on capital, partner salaries, and partner commissions. To facilitate these adjustments, it is customary to prepare a Profit and Loss Appropriation Account for the firm. This account helps determine the final amount of profit or loss to be distributed among the partners based on their agreed profit-sharing ratio. If the firm incurs a loss, partners are not entitled to receive any interest on capital, salary, or remuneration. These are allowed only when the firm has earned profit during the accounting year.

* Rent to partners and Interest on outsider's loan are debited to profit and loss account.