Is it necessary to have a partnership agreement in writing?
SOLUTION No. It is not necessary to have a partnership agreement in written form. An oral agreement is equally valid. However, in order to avoid disputes, it is preferred to…
Why salary and commission paid to partners are recorded in Profit & Loss Appropriation Account instead of Profit & Loss Account?
SOLUTION Salary and commission paid to partners are appropriation of profits and not a charge. Hence, they are debited to Profit & Loss Appropriation Account.
Name any two items which are shown on the credit of Profit and Loss Appropriation Account.
SOLUTION (i) Profit for the year. (ii) Interest on Drawings.
Name any two items which are shown on the debit of Profit and Loss Appropriation Account.
SOLUTION (i) Interest on Capital, (ii) Salary to Partners.
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