question_answer

Assertion (A) :

Net profit (after all charge items) is to be transferred to the Profit and Loss Appropriation Account. In Profit and Loss Appropriation Account, after providing all appropriations to the partners, balance (remaining profit) if any will be distributed among the partners in their profit sharing ratio. Profit and Loss Appropriation Account will not show loss.

Reason (R) :

Profit and Loss Appropriation Account will not show loss because, appropriations can not be allowed more than the profits.

Choose the Correct Option from the following:

A) Assertion and Reason both are correct and Reason is the correct explanation of assertion

B) Assertion and Reason both are correct but Reason is not correct explanation of assertion

C) Only Assertion is correct but Reason is not correct

D) Reason is correct but Assertion is not correct