CA Foundation Exam > CA Foundation Questions > ‘Salary Rs. 5,000 paid to partner&rsquo...
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‘Salary Rs. 5,000 paid to partner’ The above item will appear in _________.
- a)Notes to Accounts
- b)Revaluation A/c
- c)Profit and Loss Appropriation A/c
- d)Trading A/c
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
‘Salary Rs. 5,000 paid to partner’ The above item will app...
Profit and loss appropriation account is an account where we record all transactions related to the partners like for example their salary,interest on capital,intrest on darawing etc.so salary to partner will also appear on debit side of p&l appropriation account
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‘Salary Rs. 5,000 paid to partner’ The above item will app...
Profit and loss appropriation account is an account where we record all transactions related to the partners like for example their salary,interest on capital,intrest on darawing etc.so salary to partner will also appear on debit side of p&l appropriation account
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‘Salary Rs. 5,000 paid to partner’ The above item will app...
Explanation:
Salary paid to a partner is an appropriation of profit and hence it will appear in the Profit and Loss Appropriation Account.
Profit and Loss Appropriation Account:
- The Profit and Loss Appropriation Account is a part of the financial statements that shows how the net profit of a business is distributed among the partners.
- It records all the appropriations of profit such as partner's salaries, interest on capital, profit shares, etc.
- The salary paid to a partner is considered as an expense for the business and reduces the overall profit available for distribution among the partners.
- Hence, the entry for 'Salary Rs. 5,000 paid to partner' will be recorded on the debit side of the Profit and Loss Appropriation Account.
Other Options:
- Notes to Accounts: This section includes additional information or explanations provided in the financial statements but not directly related to the specific account entries.
- Revaluation A/c: This account is used to record the revaluation of assets and liabilities of a business, which is not related to the salary paid to a partner.
- Trading A/c: This account is used to record the buying and selling activities of a business, which is not related to the appropriation of profit.
Therefore, the correct answer is option C) Profit and Loss Appropriation A/c as it is where the salary paid to a partner will be recorded.
Salary paid to a partner is an appropriation of profit and hence it will appear in the Profit and Loss Appropriation Account.
Profit and Loss Appropriation Account:
- The Profit and Loss Appropriation Account is a part of the financial statements that shows how the net profit of a business is distributed among the partners.
- It records all the appropriations of profit such as partner's salaries, interest on capital, profit shares, etc.
- The salary paid to a partner is considered as an expense for the business and reduces the overall profit available for distribution among the partners.
- Hence, the entry for 'Salary Rs. 5,000 paid to partner' will be recorded on the debit side of the Profit and Loss Appropriation Account.
Other Options:
- Notes to Accounts: This section includes additional information or explanations provided in the financial statements but not directly related to the specific account entries.
- Revaluation A/c: This account is used to record the revaluation of assets and liabilities of a business, which is not related to the salary paid to a partner.
- Trading A/c: This account is used to record the buying and selling activities of a business, which is not related to the appropriation of profit.
Therefore, the correct answer is option C) Profit and Loss Appropriation A/c as it is where the salary paid to a partner will be recorded.
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‘Salary Rs. 5,000 paid to partner’ The above item will appear in _________.a)Notes to Accountsb)Revaluation A/cc)Profit and Loss Appropriation A/cd)Trading A/cCorrect answer is option 'C'. Can you explain this answer?
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