Assertion (A): Commission provided to partner is shown in Profit and Loss Account.
Assertion (A): The commission provided to the partner is shown in the Profit and Loss Account.
Reason (R): The commission provided to the partner is charged against profits and is to be provided at a fixed rate.
In the context of the above two statements, which of the following is correct?
a) Assertion (A) is correct but Reason (R) is wrong.
b) Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
c) Both Assertion (A) and Reason (R) are incorrect.
d) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
Anurag Pathak Changed status to publish April 15, 2023
Ans – c)
The commission provided to the partner is an appropriation. It is debited to Profit and Loss Appropriation Account.
Thus Assertion (A) is incorrect.
The commission provided to the partner is not charged against profit. It is an appropriation and is not charged at a fixed rate. It is charged at the agreed rate as mentioned in the Partnership Deed.
Thus Reason (R) is also incorrect
Anurag Pathak Changed status to publish April 4, 2023
