A gets salary Rs 12000 and B gets commission Rs 8000. On which side will both appear in Profit and Loss Appropriation Account?

Correct answer: Debit side

Salary and commission paid to partners are not ordinary operating expenses in this context. They are appropriations of profit, meaning that the firm’s profit is distributed to partners according to the partnership deed. In the Profit and Loss Appropriation Account, such appropriations are shown on the debit side. This treatment separates distribution of profit from expenses incurred to earn that profit.

A’s salary of Rs 12,000 and B’s commission of Rs 8,000 are both amounts appropriated for partners. Hence both are recorded on the debit side, making option A correct. They are not placed on opposite sides merely because one is called salary and the other commission. They would not be omitted, and they do not become capital simply because they are recorded through the appropriation account.