In a partnership business, the net profit serves as opening figure for ____
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Correct Answer: Option D
Explanation:
In a partnership business, once the net profit is calculated from the Profit and Loss Account, it is then transferred to the Appropriation Account, where it is shared or allocated among the partners in the following ways:
Interest on capital
Salaries or commissions to partners
Profit sharing based on agreed ratio
Reserves (if any)
So, the net profit serves as the opening figure in the Appropriation Account.
In a partnership business, once the net profit is calculated from the Profit and Loss Account, it is then transferred to the Appropriation Account, where it is shared or allocated among the partners in the following ways:
Interest on capital
Salaries or commissions to partners
Profit sharing based on agreed ratio
Reserves (if any)
So, the net profit serves as the opening figure in the Appropriation Account.