Question

If a partner is given salary and commission, how are these shown in the accounts?

• A. Credited to the partner’s capital account
• B. Debited to the Profit and Loss Account
• C. Debited to the Profit and Loss Appropriation Account
• D. Debited to the Realization Account

Hint:

Salary and commission given to a partner are treated as expenses for the firm and are shown in the Profit and Loss Appropriation Account. These amounts are credited to the partner's capital account.

Answer 1

The Correct Option is C

When a partner is given salary or commission, these are treated as part of the profit-sharing arrangement and are shown in the Profit and Loss Appropriation Account.
- The partner’s salary and commission are debited to the Profit and Loss Appropriation Account. 
- The corresponding credit goes to the individual partner’s capital account. 
The journal entry will be: Profit and Loss Appropriation Account Dr. Salary and Commission to Partner To Partner’s Capital Account