Question

what is the difference between the nature of commission paid to manager and commission paid to a partner ​

Answer 1

The difference between the nature of commission paid to manager and partner:

Commission paid to Manager:

• The commission given to manager is an operating expense just like rent and salaries.

• It is shown on the debit side of the P/L account because it is an expense.
• It is also recorded on the liability side of the balance sheet as it is an outstanding expense.

Commission paid to partner:

• The commission paid to partners will be included on his/her salary.
• The commissions are shared with the partners of the company in accordance with the conditions laid down on section 40(b) of the Income Tax Act.
• The shared commission must be recorded on the P/L Appropriation Account of the firm.

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Commission paid to manager and partner

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