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Accountancy – XII_2021-09

March 26, 2020
partners? (Choose the correct answer)
(A) A `60,000; B `60,000; C Nil
(B) A `90,000; B `30,000; C Nil
(C) A `40,000; B `40,000 and C `40,000
(D) A `50,000; B `50,000 and C `50,000

Appropriation in case of loss and when profits are less:

Cases Provisions

Case I When the partnership
agreement is silent No appropriation will be made
about appropriations (i.e. no interest will be allowed on capital,
like partners will not be allowed salary and
- interest on capital commission)
- partners’ salary

- partners’ commission
etc.

Case II When the partnership Full interest on capital, partners’ salary will
agreement provides for be allowed whether there is profit or loss
treating any item of
appropriation as a
charge
For example:
Deed mentions that
Interest on Capital or
Partners’ Salary will be
treated as charge
Case When the partnership Appropriations will be made only when there
III deed provides for is a profit.
appropriation but is a) In case of loss: No appropriation
silent in treating them will be made
as a charge or
appropriation. b) When the profit: Full appropriation
before appropriation will be made
is equal to or more
than the total amount
of appropriation

c) When the profit Appropriation will
before appropriation be restricted to
is less than the total the extent of
amount of appropriation profits 2

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