Partnership appropriation account allocates profits to partners

Steps:

• Identify the purpose: The appropriation account divides net profit among partners per the agreement.
• Review choices: Check which relates to profit sharing, like salaries or interest.
• Eliminate non-profit items: Capital contributions and drawings affect capital accounts, not appropriation.
• Confirm salaries: Partner salaries are appropriations from profit, appearing in this account.

Why C is correct:

• Partner salaries are a specific appropriation of profit, deducted before final division, as defined in partnership accounting standards.

Why the others are wrong:

• A: Capital contributions increase fixed capital accounts, not appropriations.
• B: Drawings reduce partners' capital or current accounts directly, bypassing appropriation.
• D: Payments to non-partners like M's sister are business expenses in the profit and loss account.

Final answer: C