If the deed provides partners salary but profit is insufficient where is salary shown?

Correct answer: Profit and Loss Appropriation Account

The governing concept is that a partner’s salary provided by the deed is an appropriation of profit rather than an ordinary operating expense of the firm. It is therefore considered after the net profit or loss has been determined in the Profit and Loss Account. The salary is then brought into the Profit and Loss Appropriation Account. If profit is insufficient, the amount may not be fully covered in the ordinary way and the deed or partnership rules determine the treatment of the deficiency, but the account used for the appropriation remains the Profit and Loss Appropriation Account. Therefore option A is correct. Trading Account measures gross profit, the Profit and Loss Account determines net profit, and Cash Account records cash movements rather than the nature of the appropriation.