Question

Match the following:

• A. A-(ii), B-(iii), C-(iv), D-(i)
• B. A-(iv), B-(iii), C-(i), D-(ii)
• C. A-(ii), B-(i), C-(iv), D-(iii)
• D. A-(i), B-(iv), C-(ii), D-(iii)

Hint:

Remember: Partner’s salary and interest on drawings go to Appropriation Account; manager’s salary and commissions go to Profit \& Loss Account.

Answer 1

The Correct Option is C

- (A) - (ii): Partner’s salary is an appropriation of profit, so it is debited to the Profit and Loss Appropriation Account, not the main P and L account.
- (B) - (i): Manager’s salary is an operating expense and hence charged to the Profit and Loss Account.
- (C) - (iv): Interest on drawings is income for the firm and credited to the Profit and Loss Appropriation Account.
- (D) - (iii): Commission received is income and credited to the Profit and Loss Account.