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Profit or Loss Appropriation A/c

To which acco...

Question

To which account salary and commission to partners and interest on capital be debited? Why?

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Solution

Profit and loss Appropriation account is prepared to show the distribution of net profit among the partners. It is only an extension of profit and loss account.
The profit and loss appropriation account is debited with items which are appropriation of profits.
So, salary and commission to partners and interest on capital being an appropriation of profit is debited to profit and loss appropriation account.

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