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WAEC Financial Accounting 2004 Question 24

Question 24

Partnership Accounts

When partners maintain fixed capital accounts, the correct entries for a partner's share of profit is

  1. A.Debit Profit and Loss Appropriation Account, credit Current Account
  2. B.Debit Profit and Loss Appropriation Account, credit Capital Account
  3. C.Debit Current Account, credit Capital Account
  4. D.Debit Profit and Loss Account, credit Current Account.
Show the answer and explanation

Answer: A (Debit Profit and Loss Appropriation Account, credit Current Account)

Explanation

With fixed capitals, profit shares go to the current accounts, leaving capital unchanged.