Question: What is the journal entry for the distribution of profits among partners?

Options:

1. Debit Profit and Loss Account, Credit Partners\' Capital Accounts
2. Debit Partners\' Capital Accounts, Credit Profit and Loss Account
3. Debit Partners\' Current Accounts, Credit Profit and Loss Account
4. Debit Profit and Loss Appropriation Account, Credit Partners\' Capital Accounts

Correct Answer: Debit Profit and Loss Account, Credit Partners\' Capital Accounts

Solution:

The distribution of profits is recorded by debiting the profit and loss account and crediting the partners\' capital accounts.