29 May 2014
Hi... I understand the difference between a charge and appropriation. But, I need to know that would the minimum guaranteed amount to the partner not be a charge? as it is to be paid irrespective of the profit or losses of the firm. If this is so, why do we show it in profit and loss appropriation account and not profit and loss account?
29 May 2014
it is correct that it is not an expense but is it not a charge? because the guaranteed amount would be paid irrespective of the profits or losses.so should it ... that is the guaranteed amount to some specific partner be shown in profit and loss account.