Neha, a partner, owns a building from where the firm carries its business. The firm pays her ₹ 10,000 as the rent for the building. Will it be transferred to Profit & Loss Account or Profit & Loss Appropriation Account? Why?
Neha, a partner, owns a building from where the firm carries its business. The firm pays her ₹ 10,000 as the rent for the building. Will it be transferred to Profit & Loss Account or Profit & Loss Appropriation Account? Why?
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Rent to the Partner is considered a charge against Profit. Thus it would be recorded at the debit side of Profit and Loss Account.
Note:- Charge against profit are the expense that is to be paid by the firm irrespective of profit or Loss at the end of the year.
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