I want to know how manager's commission is a charge against profit. I mean it must be as it appears in p/l a/c and not in p/l appropriation a/c. I need to confirm why manager's commission is not an appropriation of profit bcoz in cases where there is no profit to the firm how will the firm provide commision to the manager and hence must be treated as appropriation in this case. plzz reply soon... :)
Profit & Loss Appropriation A/c is used to distribute the profits amongst the "Partners".
A "Manager" is not a partner of the firm, he's an employee, and thus, his commission is treated just like salary i.e as a charge against profits.
Remember: Commission of a "Partner" would be an appropriation and hence, debited to P & L Appropriations A/c (Provided only in case of profits).
If there is no profit, Manager's commission would still be paid and the Partners/Company will have to bear the loss.
:)
A "Manager" is not a partner of the firm, he's an employee, and thus, his commission is treated just like salary i.e as a charge against profits.
Remember: Commission of a "Partner" would be an appropriation and hence, debited to P & L Appropriations A/c (Provided only in case of profits).
If there is no profit, Manager's commission would still be paid and the Partners/Company will have to bear the loss.
:)