Question

Is Interest on Loan by partner debited to Profit and Loss Appropriation Account?

Answer 1

Profit and loss appropriation account is opened to show the distribution of net profit among the partners. It is an extension of profit and loss account.

Profit and loss appropriation account is debited with items that are appropriation of profits. An appropriation of profit is the distribution of net profit. Interest on loan by partner is also an appropriation of profit. So,it is debited to profit and loss appropriation account.