In my T.S.G. book it is written "Rent paid to a partner is a charge against the profit and not an appropriation out of profits. It, therefore, is to be debited to Profit and Loss A/c (not to the Profit and Loss Appropriation A/c) and credited to Partners' Current A/cs in case of fixed capitals or to Partners' Capital A/cs when capitals are fluctuating.
In practice i do not credit it to partners' capital a/c (in case of fluctuating capital method) or to partners' current a/c (in case of fixed capital method). Q1. Should i credit it?
Q2. Should Interest on partners' loan, manager's commission (which are considered a charge against profit) be also credited to Partners' Capital a/c (in case of fluctuating capital method) or to Partners' Current a/c (in case of fixed capital method)?
In my T.S.G. book it is written "Rent paid to a partner is a charge against the profit and not an appropriation out of profits. It, therefore, is to be debited to Profit and Loss A/c (not to the Profit and Loss Appropriation A/c) and credited to Partners' Current A/cs in case of fixed capitals or to Partners' Capital A/cs when capitals are fluctuating.
In practice i do not credit it to partners' capital a/c (in case of fluctuating capital method) or to partners' current a/c (in case of fixed capital method). Q1. Should i credit it?
Q2. Should Interest on partners' loan, manager's commission (which are considered a charge against profit) be also credited to Partners' Capital a/c (in case of fluctuating capital method) or to Partners' Current a/c (in case of fixed capital method)?
Any charge against profits is never transferred to Partner’s Capital A/c or Current A/c i.e. why Rent paid to a partner, Interest on Partner’s loan and Manager’s Commission are never credited to Partner’s Capital A/c or Current A/c.
Any charge against profits is never transferred to Partner’s Capital A/c or Current A/c i.e. why Rent paid to a partner, Interest on Partner’s loan and Manager’s Commission are never credited to Partner’s Capital A/c or Current A/c.
