Partnership

Profit and loss appropriation account is

• Real account

• Personal account

• Nominal account

• None of the above

How is Interest on drawings recorded

• Interest on drawings

  Dr

  Drawings

  Cr

• Interest on drawings

  Dr

  Partners Current A/C

  Cr

• Interest on drawings

  Dr

  Profit & Loss A/C

  Cr

• Interest on drawings Dr

  P/L Appropriation A/C

  Cr

Advantage of maintaing both capital and current account for each partner

• Easy to see the amount invested and calculate interest

• Easy to see whether drawings exceed the total profit share

• Easy to calculate partners salary

• Easy to claculate interest on drawings

Disadvantage of Parnership are

• Profit is shared

• Disagreement between partners

• Longer time spent on decision making

• All 3

What discourages partners to withdraw money from the firm

• Partner's salary

• Interest on capital

• Interest on drawings

• Interest on loan