Partner salary of Rs 8,000 was credited to the Appropriation Account although it should have been debited. What is the effect on remaining profit?

Correct answer: It will be overstated by Rs 16,000

Partner salary is an appropriation of profit, not an ordinary operating expense. It should be debited to the Profit and Loss Appropriation Account, thereby reducing the profit left for distribution among partners. A correct debit of Rs 8,000 would reduce remaining profit by Rs 8,000. However, the amount was credited instead, so remaining profit was increased by Rs 8,000. The difference between the proper debit and the incorrect credit is therefore Rs 8,000 + Rs 8,000 = Rs 16,000. The remaining profit is consequently overstated by Rs 16,000. Option B considers only the effect of the wrong credit, option C reverses the direction, and option D ignores the error. Therefore, option A is correct.