Multiple choice

Commission paid to a partner is shown in Profit and Loss Appropriation Account, but commission paid to manager is shown in Profit and Loss Account. What is the reason behind it?

  1. It is an Appropriation.

  2. Commission to manager is not compulsory.

  3. It is paid after the appropriations.

  4. It is a charge against the Profit.

  5. It is a Capital expenditure.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  1. Commission payable to manager is a charge against the profit. It means commission will be paid whether there is profit or loss.
    1. In case of loss no commission (appropriation) will be given to partners.
       

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