Partners' appropriations in partnership accounting

Steps:

• Identify items in appropriation account: allocates profits via interest on capital (credit), partners' salaries (credit), and share of profit (credit).
• Note interest on drawings: debited directly to partners' current accounts, bypassing appropriation account.
• Trace to current accounts: credits for interest on capital and salaries from appropriation; debits for drawings interest and profit shares.
• Compare overlaps: interest on capital and salaries appear in both; drawings interest only in current accounts.

Why C is correct:

• Per partnership accounting standards (e.g., IAS 28), appropriation account credits interest on capital and salaries, which transfer as credits to current accounts, recording both items in each.

Why the others are wrong:

• A: Includes 1 (likely interest on drawings), which skips appropriation account.
• B: Excludes 2 and 3, ignoring their dual recording.
• D: Omits 2, understating appropriations' role.

Final answer: C