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JAMB Principles of Accounts 2000 Question 38

Question 38

Partnership Accounts

An item of appropriation in partnership profit and loss account is

  1. A.interest on partners' capital
  2. B.interest on partners' loan
  3. C.employees' salaries
  4. D.partners' drawings.
Show the answer and explanation

Answer: A (interest on partners' capital)

Explanation

Interest on capital shares out profit among partners, so it goes in the appropriation account; loan interest is an expense.