Question
Accountancy Question on Partnership Accounts
A, B, and C are partners sharing profits in the ratio of 3:2:1. C died on 1st July, 2023. On this date, final accounts were prepared to ascertain profits for the period. It resulted in a profit of ₹1,75,000 to the firm. To give effect to the above
A
Profit and Loss Account will be debited
B
Profit and Loss Appropriation Account will be debited
C
Profit and Loss Account will be credited
D
Profit and Loss Appropriation Account will be credited
Answer
Profit and Loss Appropriation Account will be credited
Explanation
Solution
The profit of ₹1,75,000 is transferred to the Profit and Loss Appropriation Account, as the appropriation account is responsible for distributing profits among partners.
Hence, the correct answer is Option 4.