Partnership Appropriation Account Entries

Steps:

• Recall that the appropriation account allocates net profit to partners after the profit and loss account.
• Identify standard credits: interest on partners' capital and partners' salaries, as they are fixed appropriations.
• Note the residual profit is then divided by profit-sharing ratio, but fixed items precede this.
• Exclude non-appropriation items like interest on drawings or drawings, handled in partners' current accounts.

Why B is correct:

• Per accounting standards (e.g., IAS 28 or local GAAP), appropriation accounts record only profit allocations like interest on capital (1) and salaries (2), not charges or drawings.

Why the others are wrong:

• A includes 3 (e.g., interest on drawings), which debits current accounts, not appropriation.
• C includes 4 (e.g., drawings), a capital withdrawal outside profit allocation.
• D pairs 3 and 4, both irrelevant to profit appropriation.

Final answer: B