Question 1. Asked on :06 October 2020:12:09:18 PM
Write the difference between Profit and Loss Account and Profit and Loss Appropriation Account?
-Added by nisha sheikh Accountancy » Accounting For Partnership Firms: Fundamentals
Answer:
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Basis |
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It is prepared after Profit and Loss Account and therefore, starts with Net Profit or Net Loss as transferred from the Profit and Loss Account. |
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It determines Net Profit earned or Net Loss Incurred during the Accounting Year. |
It shows Appropriation of Net Profit i.e., distribution of Net Profit for the Accounting Period among the Partners. |
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It is debited with the expenses and credited with the income, not being business income to determine net profit for accounting period. |
It is debited with the items of appropriation of profit like salary, commission, interest on capital, transfer to reserve, etc. and credited with the items of income being debited to Partners’ Capital Account or Current Accounts such as interest on drawings |
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Partnership Deed |
This account is not guided by the Partnership Deed or Agreement. |
This account is prepared as guided by the Partnership Deed or Agreement or provisions of Indian Partnership Act, 1932. |
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It follows the Matching Principle where revenue is matched against expense. |
It does not follow the Matching Principle. |
-Answered by nisha sheikh On 06 October 2020:03:06:40 PM
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