Halidu and Hamed are business partners with N30,000 and N20,000 capital respectively. At the end of the financial year, a profit of N12,000, which included Halidu's salary of N3,000 was made.
Hamed's share of the profit should be
The correct answer is B. credited to partners' current account
In partnership accounting, the partners' current accounts are used to record the distribution of profits and losses, as well as any withdrawals (drawings) made by the partners.
When a profit is distributed, it is credited to the partners' current accounts in accordance with their profit-sharing ratio.
This increases the balance of their current accounts, reflecting the increase in their equity in the partnership.
So, after the profit has been calculated and Halidu's salary has been deducted, the remaining profit will be divided between Halidu and Hamed according to their agreed profit-sharing ratio, and Hamed's share will be credited to his current account.
This represents his share of the profit for the financial year.
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