If the deed provides commission to a partner, in which account is it adjusted?

Correct answer: Profit and Loss Appropriation Account

A commission allowed to a partner under the partnership agreement is normally treated as an appropriation of profit, because it is a distribution or allocation of the firm’s profit to a partner after determining the operating result. It is therefore recorded through the Profit and Loss Appropriation Account. This account shows how the available profit is distributed among partners through items such as salary, commission, interest on capital, and the residual profit share. The Sales Account records revenue from goods sold, and the Purchases Account records the cost of goods acquired; neither is the proper account for partner commission. The beginning of the Cash Book is also unrelated. Hence, option A is correct.