Partner salary
A partner salary is an agreed allocation of partnership profit to a partner, often recognising work performed before sharing the residual profit. In basic partnership accounts it is an appropriation rather than an employee wage expense. Credit the partner’s current account, or the capital account under a fluctuating-capital system, according to the question’s records. Any cash withdrawal is recorded separately.
Worked example
Profit before appropriation is $40,000. A receives a $10,000 salary allocation and the remaining $30,000 is shared equally: A is allocated $25,000 and B $15,000.
Common mistake
An agreed salary allocation does not prove the partner has received that amount in cash. Keep allocation and drawings separate.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | K1 | Direct | July 2027–August 2028 |
Related terms
Also called: Partners’ salaries, Partnership salary appropriation