For distribution of profits among the partners, the following account is debited to the partners: Option 1: Profit and Loss Appropriation A/c Option 2: Partner's Capital A/c Option 3: Goodwill A/c Option 4: Profit and Loss A/c

Answer: Profit and Loss Appropriation A/c. Solution: When profits are distributed among partners, the accounting entry involves debiting the Profit and Loss Appropriation Account and crediting individual Partners' Capital/Current Accounts. The Profit and Loss Appropriation Account shows how the net profit (already calculated in Profit and Loss Account) is appropriated or distributed among partners according to their profit-sharing ratio. Journal Entry for profit distribution:, Account, Dr. (₹), Cr. (₹), Profit and Loss Appropriation A/c Dr., xxx, To Partner A's Capital A/c, xxx, To Partner B's Capital A/c, xxx, The Profit and Loss Account transfers the net profit to Profit and Loss Appropriation Account. Then, the Profit and Loss Appropriation Account distributes (appropriates) this profit among partners by debiting itself and crediting partners' accounts. Option 2 (Partner's Capital A/c) is credited, not debited, when partners receive their share of profit. Option 4 (Profit and Loss A/c) is used to calculate net profit, not for distribution among partners. Option 3 (Goodwill A/c) is unrelated to profit distribution.

Partnership

Accounting

Easy

common

For distribution of profits among the partners, the following account is debited to the partners:

Profit and Loss Appropriation A/c

Partner's Capital A/c

Goodwill A/c

Profit and Loss A/c

✅ Correct Option: 1

When profits are distributed among partners, the accounting entry involves debiting the Profit and Loss Appropriation Account and crediting individual Partners' Capital/Current Accounts.

The Profit and Loss Appropriation Account shows how the net profit (already calculated in Profit and Loss Account) is appropriated or distributed among partners according to their profit-sharing ratio.

Journal Entry for profit distribution:

Account	Dr. (₹)	Cr. (₹)
Profit and Loss Appropriation A/c Dr.	xxx
To Partner A's Capital A/c		xxx
To Partner B's Capital A/c		xxx

The Profit and Loss Account transfers the net profit to Profit and Loss Appropriation Account. Then, the Profit and Loss Appropriation Account distributes (appropriates) this profit among partners by debiting itself and crediting partners' accounts.

Option 2 (Partner's Capital A/c) is credited, not debited, when partners receive their share of profit.

Option 4 (Profit and Loss A/c) is used to calculate net profit, not for distribution among partners.

Option 3 (Goodwill A/c) is unrelated to profit distribution.

2025: 3 June Shift 2

Match List-I with List-II

List-I	List-II
(A) Bank (fresh capital introduced)	(I) Debit side of Partner's Current Account
(B) Interest on drawings	(II) Debit side of Partner's Capital Account
(C) Bank (permanent withdrawal of capital)	(III) Credit side of Partner's Current Account
(D) Commission	(IV) Credit side of Partner's Capital Account

Choose the correct answer from the options given below:

2026: 29 May Shift 1

Calculate the value of the goodwill of a firm based on 3 years' purchase of super profits, if the normal rate of return is 10%, average profits for the last five years were Rs. 60,000 and the capital of the firm is Rs. 5,00,000.

2025: 31 May Shift 1

If partnership deed is silent on the profit sharing ratio: interest @_____ per annum is allowed on loans advanced by partners-

2025: 27 May Shift 2

The Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm,

Which, among the following, is not shown in the Profit and Loss Appropriation Account?

2022: 23 Aug Shift 2

M and R are partners sharing profits and losses in the ratio of 3 : 2. Their capital A/c's showed the balance of Rs. 4,00,000 and Rs. 3,00,000 respectively on 1 April, 2021. M introduced additional capital on 1 August, 2021. Interest on capital is allowed @ 6% p.a. Total interest on capital of both the partners is Rs. 50,000.

Calculate additional capital introduced by M on 1 August, 2021 and interest on capital earned on additional capital. Books are closed on 31 March.

2025: 31 May Shift 1

Which combination of statements is true about partnership-

(A) Valid partnership can be formulated even without a written agreement between the partners.

(B) Methods of settlement of disputes among the partners can't be part of the partnership deed.

(D) Each partner carrying on the business is the principal as well as the agent for all the other partners.

Choose the correct answer from the options given below:

For distribution of profits among the partners, the following account is debited to the partners:

Solution

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