Profit Distribution

A partner's agreed salary is an appropriation of profit and is credited to the partner's account when profits are distributed. The typical accounting entry is: Profit and Loss Appropriation A/c Dr. and To A’s Capital/Current A/c ₹12,000. Hence ₹12,000 will be credited to A’s account. Option B (₹6,000) is incorrect as it assumes only half-year salary; option C is wrong because the salary is payable, not zero; option D (₹24,000) is incorrect as it doubles the salary. Exam tip: remember partner salary is recorded by debiting P&L Appropriation and crediting the partner’s capital/current account.

Calculation: Interest = (rate/100) × capital = (10/100) × ₹50,000 = ₹5,000. Option B (₹10,000) would be 20% of the capital, option C is 100% of the capital and option D equals 30% — hence they are incorrect. Exam tip: convert percent to a fraction or decimal and multiply by the capital for quick calculation.

Interest = principal × rate × time. Here principal = ₹20,000, rate = 5% = 0.05, time = 1 year. So interest = \(20,000 \times 5\% = 20,000 \times 0.05 = 1,000\) rupees. Option (D) ₹2,000 would correspond to 10% (not 5%), and (B) and (C) are clearly incorrect. Exam tip: use the formula P×R×T to compute interest quickly when rate is per annum and time is in years.

A partner's salary is deducted from net profit to find the remaining (distributable) profit. Calculation: ₹60,000 − ₹10,000 = ₹50,000. Option D (₹60,000) is incorrect because it ignores the salary deduction; option C (₹10,000) is just the salary amount, not the remaining profit. Exam tip: always subtract partner-related charges (salary, commission) from net profit before dividing the residual among partners.

With a 4:1 ratio the total parts = 4 + 1 = 5. One part = 50,000 ÷ 5 = 10,000 rupees. B gets one part, so B's share = 10,000 rupees. Option B (40,000) is wrong because it treats B as having four parts (confusing B with A). Exam tip: always find total parts first, then divide the total profit by total parts to get one part quickly.

The direct answer is Option A: Profit and Loss Appropriation Account. After net profit is found in the Profit and Loss Account, partners decide how that profit will be used or distributed. Transfer to reserve is an appropriation of profit, so it is recorded on the debit side of the Profit and Loss Appropriation Account. Option A is correct. Option B, Trading Account, finds gross profit from trading activities and does not distribute profit. Option C, Cash Account, records cash receipts and payments; a reserve transfer normally has no immediate cash movement. Option D, Bank Pass Book, is only a bank record and is not a profit-distribution account. Exam cue: salary, commission, interest on capital and reserve transfers are considered after net profit in appropriation.

Reserve = 20% of profit. 20% = 0.20 so reserve = 0.20×₹50,000 = ₹10,000. The remaining profit ₹40,000 is available for distribution. Option B (₹20,000) would correspond to 40% and is therefore incorrect; option C is the full profit and option D equals 10% — both wrong. Exam tip: convert the percentage to a decimal (20% → 0.20) and multiply by the amount for a quick calculation.

Guaranteed profit assures a minimum amount to a partner. If actual share is less the deficiency is made good.

The governing concept is deficiency under a minimum-profit guarantee. Deficiency is the shortfall between the guaranteed amount and the partner's actual share. It is calculated as ₹10,000 − ₹8,000 = ₹2,000. Thus, option A is correct, and the guarantor or guarantors would generally bear this shortfall according to the partnership agreement. The actual share itself is not the deficiency.

A guarantee is a minimum assured amount, not a cap. When the partner’s actual share exceeds the guaranteed amount, the partner receives the actual (higher) share. Option B is incorrect because guarantee is not the maximum payable; option C is wrong because the firm does not pay both the guarantee and the actual share separately (no double payment). Exam tip: Treat the guarantee as a floor — always compare actual share with the guarantee and pay the higher amount.

Partner bonus is generally deed based appropriation. It can be shown in appropriation account like salary or commission.

The Profit and Loss Appropriation Account starts with net profit on its credit side. Amounts such as partners’ salary, commission, and interest on capital are appropriations of that profit, so they are placed on the debit side. After these appropriations are deducted, the balance represents the profit that is still available for distribution among the partners. It is not the original gross profit, a bank loan, or a customer balance.

Thus, choice A is correct: the balance shows the remaining profit for distribution. For example, if net profit is ₹100,000 and salary appropriations total ₹20,000, the remaining ₹80,000 is distributed according to the agreed profit-sharing ratio, after considering any other required appropriations. The account therefore explains how net profit is applied among partners. The supplied answer is accurate, although the exact distribution would require the ratio and all relevant adjustments.

Add interest on drawings and deduct interest on capital. Forty thousand plus one thousand minus five thousand equals thirty six thousand.

Salary and reserve both are deducted from profit. Seventy thousand minus ten thousand minus five thousand equals fifty five thousand.

The deed may contain profit ratio salary interest and commission terms. Reading it first gives correct answer.

Without deed interest on capital is not allowed. Six percent rule is for partner loan not capital.

In absence of a deed, profits (and losses) are shared equally among partners — this is the default rule. Option B would apply only if the deed specifies sharing in proportion to capital. Option C is relevant when the agreement provides for partner salaries or reward for services. Option D is incorrect because drawings are not the basis for profit sharing by default. Exam tip: Memorize default partnership rules — equal sharing of profits unless the deed states otherwise, and no automatic interest or salary to partners unless agreed.

Total parts = 2 + 2 + 1 = 5 parts. One part = ₹50,000 ÷ 5 = ₹10,000. C has 1 part, so C's share = ₹10,000. Closest distractor: ₹20,000 corresponds to two parts (A or B), not C. Exam tip: always add the ratio parts first, then divide the total profit by the sum to find one part.

Equal sharing among three partners divides ninety thousand into three parts. Each will get thirty thousand.

Partner salary is appropriation of profit and appears on debit side. Interest on drawings appears on credit side.

Interest on drawings is income for firm so it appears on credit side. Interest on capital and salary appear on debit side.

The governing concept is distribution according to the agreed profit-sharing ratio. Total ratio parts are 5 + 3 = 8, so the value of one part is ₹80,000 ÷ 8 = ₹10,000. A receives five parts, giving 5 × ₹10,000 = ₹50,000. Therefore, option A is correct. ₹30,000 is B's three-part share, while ₹80,000 is the total profit.

A:B = 3:1 means total parts = 3 + 1 = 4. Divide the total loss ₹40,000 by 4 to get one part = ₹10,000. B has 1 part, so B's share = ₹10,000. The common wrong choice (₹30,000) results from mistakenly giving B the 3 parts belonging to A. Options C and D do not match the ratio distribution. Exam tip: always add the ratio numbers to get total parts, then divide the total amount by that sum to find one part.

The governing concept is that profit-sharing rights arise from the partnership agreement, not automatically from the amount of capital introduced. Partners may contribute unequal capital while agreeing to share profits equally or in any other specified ratio. Therefore, inequality of capital by itself does not change the profit-sharing ratio, so option A is correct. A different ratio can apply only when the deed or a subsequent valid agreement states it. Option B incorrectly links capital and profit mechanically, while options C and D introduce conditions that have no authority under the normal partnership rules.

The direct answer is A: first adjust appropriations such as salary, interest, commission, and reserve; then distribute the remaining profit in the agreed profit-sharing ratio. Profit distribution is not a random division. Step 1: identify the profit available. Step 2: make the required appropriations according to the partnership agreement. Step 3: calculate the balance left. Step 4: divide that balance in the profit-sharing ratio. Option A is correct because it gives this complete sequence. Option B is wrong because profit is not always shared equally; the agreement may specify 3:2 or another ratio. Option C is wrong because capital may matter for interest on capital and related adjustments. Option D is wrong because drawings are withdrawals, not automatically an addition to profit. Remember: adjust first, share later.