In case of a partnership, “___ Account” is created to demonstrate the change in each partner’s individual capital as a result of profit or loss incurred by the firm.

Partner`s capital account

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Partner`s current account

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Profit & Loss appropriation account

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None of the above

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Solution

The correct option is C
Profit & Loss appropriation account

“Profit and Loss Appropriation Account” is created to demonstrate the change in each partner’s individual capital as a result of profit or loss incurred by the firm.

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Q. Interest on capital is given from profit and loss appropriation account to a partner __________________.

The revaluation profit/ loss is transferred to the capital accounts of all partners in ______.

Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3:1. The profit and loss account of the firm for the year ending March 31, 2017 shows a net profit of Rs 1,50,000. Prepare the Profit and Loss Appropriation Account by taking into consideration the following information:

(i) Partners capital on April 1, 2016;

Simmi, Rs 30,000; Sonu, Rs 60,000;

(ii) Current accounts balances on April 1, 2016;

Simmi, Rs 30,000 (cr.); Sonu, Rs 15,000 (cr.);

(iii) Partners drawings during the year amounted to

Simmi, Rs 20,000; Sonu, Rs 15,000;

(iv) Interest on capital was allowed @ 5% p.a.;

(v) Interest on drawing was to be charged @ 6% p.a. at an average of six months;

(vi) Partners’ salaries : Simmi Rs 12,000 and Sonu Rs 9,000. Also show the partners’ current accounts.

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In case of a partnership, “___ Account” is created to demonstrate the change in each partner’s individual capital as a result of profit or loss incurred by the firm.

The correct option is C Profit & Loss appropriation account “Profit and Loss Appropriation Account” is created to demonstrate the change in each partner’s individual capital as a result of profit or loss incurred by the firm.

The correct option is C
Profit & Loss appropriation account

“Profit and Loss Appropriation Account” is created to demonstrate the change in each partner’s individual capital as a result of profit or loss incurred by the firm.