If partners commission is provided in the deed what type of item is it?

Correct answer: Appropriation of profit

Commission paid or allowed to a partner is a distribution of the firm’s profit according to the partnership agreement. The partner receives it because of the agreed arrangement among the partners, not because it is an ordinary operating cost incurred to purchase goods or run the business. It is therefore dealt with after the firm’s net profit has been determined.

In the Profit and Loss Appropriation Account, partner commission is shown as an appropriation on the debit side because it distributes or appropriates profit to a partner. Hence option A, appropriation of profit, is correct. It is not the cost of goods, a bank loan, or a recovery from a customer. The deed may specify the amount or method of calculating the commission.