Q.A and B are partners sharing profits and losses equally. Their capitals as on 1st April 2023 were A ₹2,00,000 and B ₹1,50,000. The partnership deed provides:

Appropriations of profit (partner's salary, interest on capital, share of profit) go in the P&L Appropriation account; charges against profit go in the P&L account. Option (a).

The Profit and Loss Appropriation account is prepared after the ordinary P&L account to show how the net profit is divided among partners. It records only appropriations of profit:

• Partner's salary/commission, interest on partners' capital, transfer to reserve, and the balance shared in the profit-sharing ratio.

The other options are charges against profit debited in the ordinary Profit and Loss account:

• Office expenses and staff salary are business operating expenses; interest on a bank loan is a business finance cost.

Partner's salary is an appropriation of profit, so it is shown in the Profit and Loss Appropriation Account — option (a).

In the Accounts of Partnership Firms – Fundamentals topic of the TN HSC Commerce syllabus, a clear distinction is drawn:

• Charges against profit — business expenses that must be deducted before arriving at net profit; these go into the Profit and Loss Account. Examples: office expenses, interest on bank loan, salary paid to staff.
• Appropriations of profit — the way the net profit is divided among the partners; these go into the Profit and Loss Appropriation Account. Examples: partner's salary, partner's commission, interest on capital, interest on drawings, transfer to reserve, and the final share of profit.

Checking each option: (b) office expenses, (c) interest on bank loan and (d) salary of staff are all charges against profit shown in the Profit and Loss Account, whereas (a) partner's salary is a reward to a partner and is therefore an appropriation shown in the Profit and Loss Appropriation Account.