If the deed allows A a twenty percent commission on profit before distributing the remaining profit, what is the nature of this item?

Correct answer: Appropriation of profit

A commission granted to a partner under the partnership deed is an appropriation of profit, not a cost incurred to purchase or sell goods. It is calculated after determining the relevant profit and is shown in the Profit and Loss Appropriation Account before the balance is distributed among the partners. Therefore, option A is correct. The expression “before distributing the remaining profit” indicates that the commission has priority in the appropriation process. A trading purchase relates to acquiring inventory, a capital loss concerns a capital transaction, and sales revenue is income from customers; none describes a partner’s profit-based commission. The exact numerical amount would require the stated profit, but its accounting nature is clear.