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A Level Accounting (9706)•9706/12/O/N/18
Question 13 from 9706/12/O/N/18

Explanation

Appropriation account excludes non-profit division items

Steps:

  • Identify appropriation account purpose: divides net profit among partners via interest, salaries, residuals.
  • List typical inclusions: partner salaries, interest on capital/drawings, profit shares.
  • Review options: assume 1=partner salary (included), 2=net profit (not, as it's input), 3=office rent (not, expense in profit/loss), 4=interest on loan (not always, if external).
  • Select pair excluding appropriation: 2 and 3 as non-division items.

Why C is correct:

  • Items 2 (net profit) and 3 (office rent) belong to income statement, not appropriation per partnership accounting rules.

Why the others are wrong:

  • A includes 1 (salary, valid appropriation item).
  • B includes 1 (salary) and excludes 4 (loan interest, potentially appropriation if partner-related).
  • D includes 4 (loan interest, often in appropriation if internal).

Not enough information on exact items 1-4 for precision.

Final answer: C

Topic: Preparation of financial statements

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