Assertion (A): Salary allowed to a partner is shown in Profit and Loss Appropriation A/c. Reason (R): Salary is allowed to a partner only when there is a provision for the same in the partnership deed. In the context of the above statements, which of the following is correct?

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KollegeApply · Accepted Answer

Both (A) and (R) are correct. Explanation: Salary allowed to a partner is shown in the Profit and Loss Appropriation Account because it is considered an appropriation of profit rather than a charge against profit. Therefore, such a salary is not recorded in the Profit and Loss Account but is instead shown in the Profit and Loss Appropriation Account. Additionally, a salary is allowed to a partner only when there is a specific provision for it in the partnership deed. According to the Indian Partnership Act, 1932, in the absence of a partnership deed or if the deed is silent on the matter, no salary is payable to any partner.

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