GCSE-readyPartners' current accounts and the statement of financial position
After the appropriation account shares out the profit, each partner's share is recorded in their current account. The balances then appear in the capital section of the statement of financial position.
The appropriation account
| Appropriation account for the year | £ | £ |
|---|---|---|
| Profit for the year | 42 000 | |
| Add interest on drawings: Asha | 300 | |
| Add interest on drawings: Ben | 200 | 500 |
| 42 500 | ||
| Less salary: Ben | (8000) | |
| Less interest on capital: Asha | 2000 | |
| Less interest on capital: Ben | 1250 | (3250) |
| Residual profit | 31 250 | |
| Share: Asha (3/5) | 18 750 | |
| Share: Ben (2/5) | 12 500 | 31 250 |
Current accounts in columns
At 1 January Asha's current account had a credit balance of £1200 and Ben's had a debit balance of £800 (he had drawn more than he had earned).
| Dr | Asha £ | Ben £ | Cr | Asha £ | Ben £ |
|---|---|---|---|---|---|
| Balance b/d | 800 | Balance b/d | 1200 | ||
| Drawings | 18 000 | 14 000 | Salary | 8000 | |
| Interest on drawings | 300 | 200 | Interest on capital | 2000 | 1250 |
| Balance c/d | 3650 | 6750 | Share of profit | 18 750 | 12 500 |
| Totals | 21 950 | 21 750 | Totals | 21 950 | 21 750 |
| Balance b/d | 3650 | 6750 |
The capital section
| Capital and current accounts | Asha £ | Ben £ | Total £ |
|---|---|---|---|
| Capital accounts | 40 000 | 25 000 | 65 000 |
| Current accounts | 3650 | 6750 | 10 400 |
| 43 650 | 31 750 | 75 400 |
Why keep current accounts?
Current accounts collect the year's items (salary, interest, profit share, drawings), so each partner can see how much more they have earned than taken out.
A partner's current account opens with a credit balance of £2000. During the year: salary £6000, interest on capital £1500, share of profit £15 000, drawings £19 000, interest on drawings £250. Find the closing balance.
- Credits: 2000 + 6000 + 1500 + 15 000 = 24 500
- Debits: 19 000 + 250 = 19 250
- Balance = 24 500 − 19 250 = £5250 credit
Answer: £5250 credit balance
Profit is shared in the appropriation account, then each partner's salary, interest on capital and profit share are credited to their current account, and drawings and interest on drawings are debited. Capital and current account balances form the financing section of the statement of financial position.
- Statement of financial position
- Older name: balance sheet
- Appropriation account
- The statement that shows how a partnership's profit for the year is shared between the partners.
- Capital
- The owner's investment in the business; assets minus liabilities.
- Interest on capital
- An appropriation of profit paid to partners on the capital they have invested.
- Drawings
- Money or goods taken out of the business by the owner for private use.
- Interest on drawings
- An amount charged to partners on their drawings, which adds to the profit shared.
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Partners Ali and Bea share residual profit 3 : 2. Profit for the year is £60 000. Salaries are £12 000 (Ali) and £8000 (Bea). Interest on capital is £2500 (Ali) and £1500 (Bea). What is the residual profit to be shared?
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Answer: 36000
£60 000 − £20 000 salaries − £4000 interest = £36 000.
Ali's current account opens with £1000 (credit). Ali is credited with salary £12 000, interest on capital £2500 and profit share £21 600. Drawings are £33 000. What is the closing balance?
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Answer: 4100
£1000 + £12 000 + £2500 + £21 600 − £33 000 = £4100.
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Checked by the GCSE-ready editorial team, 17 October 2026. Last updated 2 October 2026. Spotted a mistake? Tell us and we will fix it.