Question : Which of the following items is not dealt with through a Profit and Loss Appropriation Account?
Option 1: Interest on partner's loan
Option 2: Partner's salary
Option 3: Interest on partner's capital
Option 4: Partners commission
Answer (1)
20th Jan, 2024
Correct Answer: Interest on partner's loan
Solution : Answer = interest on partner's loan
Interest on a partner's loan is not typically dealt with through a profit and loss appropriation account. Instead, it is usually accounted for separately as an expense in the income statement or as an adjustment to the partner's capital account. Interest on the loan is charged against profit; interest on the loan shall be paid even if there are losses.
Hence, the correct option is 1.
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