If the deed provides for a partner's salary but the firm has made a loss, the correct treatment of the salary will depend on what?

Correct answer: Wording of the deed — whether the salary is to be charged as a firm expense or treated as an appropriation of profit

The key point is that the deed's wording controls treatment. If the deed expressly treats salary as a firm expense it is charged to the Profit & Loss (even if this increases the firm's loss). If the deed treats salary as an appropriation of profits, it can only be paid out of distributable profits and cannot be taken in a loss situation unless there is an express contrary provision. Option B (availability of distributable profit) is a relevant consideration but secondary — it only matters if the deed treats salary as an appropriation. Exam tip: read the deed wording literally for phrases like “charged to profit & loss” or “to be paid out of profits” to decide the correct accounting treatment.