Mam, you just tell me what to do if it is written in the ques. that
" after allowing a salary of ", " after charging a salary of ", "before allowing interest on capital ", "before charging interest on capital ", ?
What is added to or deducted from N. P. in the ques. ? And what we have to add to or deduct from the N. P. while transferring to P/L Appr. A/C ?
Pls. Just tell me in simple language.
Dear Student,
When the question says:
1)"after allowing salary" or "after charging salary"- Add salary to the given Net Profit and Transfer the total amount to credit of Profit and Loss Appropriation A/c.
2) "after allowing interest on capital" or "after charging interest on capital" - Add Interest on Capital to the given Net Profit and Transfer the total amount to credit of Profit and Loss Appropriation A/c.
The transferred profit is known as "NET PROFIT BEFORE ALL THE ADJUSTMENTS, after transferring the profit, provide for all the adjustments like salary, interest, commission, etc on the Debit side of this account.
Profit and Loss Appropriation A/c is prepared to distribute the profit among the partners in the form of salary, interest on capital, etc, that is why, we take NET PROFIT BEFORE ALL THE ADJUSTMENTS.
Hope this clarifies your doubt, for further doubts, do get back to us.
We assure you our help.
Keep posting!!
When the question says:
1)"after allowing salary" or "after charging salary"- Add salary to the given Net Profit and Transfer the total amount to credit of Profit and Loss Appropriation A/c.
2) "after allowing interest on capital" or "after charging interest on capital" - Add Interest on Capital to the given Net Profit and Transfer the total amount to credit of Profit and Loss Appropriation A/c.
The transferred profit is known as "NET PROFIT BEFORE ALL THE ADJUSTMENTS, after transferring the profit, provide for all the adjustments like salary, interest, commission, etc on the Debit side of this account.
Profit and Loss Appropriation A/c is prepared to distribute the profit among the partners in the form of salary, interest on capital, etc, that is why, we take NET PROFIT BEFORE ALL THE ADJUSTMENTS.
Hope this clarifies your doubt, for further doubts, do get back to us.
We assure you our help.
Keep posting!!