The deed says the managing partner's bonus will be treated as an expense before calculating profit. Which account will be debited?

Correct answer: Profit and Loss Account

The governing concept is the accounting difference between an expense charged before profit determination and an appropriation made after profit determination. The deed expressly calls the managing partner's bonus an expense before calculating profit. It must therefore be debited to the Profit and Loss Account while arriving at net profit, reducing the profit that will later be appropriated among partners. Option A is correct. The Appropriation Account is used after net profit has been determined for items such as profit distribution and partner appropriations. A capital account records the partner's capital movements, and goodwill records business reputation, so neither is appropriate for this bonus expense.