Choose the correct option for transferring partner's salary to Profit and Loss Appropriation A/c
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Profit & Loss Appropriation account is debited and the salary to partners account is credited.
A partner’s salary is not an expense of the firm but a share of profit given to him in a fixed form, so it is charged to the Profit and Loss Appropriation A/c. Two entries are passed. First the salary is allowed to the partner (Salary to Partner A/c Dr., To Partner’s Capital/Current A/c). Then the Salary to Partner A/c is closed by transferring it to the appropriation account, which is the entry asked for:
Profit and Loss Appropriation A/c Dr.
To Salary to Partners A/c
NCERT (2026-27 edition):
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