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What is difference between profit and loss account and profit and loss appropriate account?
The major differences between profit and loss account and profit and loss appropriate account are as follows −
Profit and loss account
It is prepared by all types of businesses.
It doesn’t have an opening or closing balance.
It is prepared after trading account.
The items debited are all expenses.
Not based on the partnership agreement.
The matching principle is not followed.
To ascertain net profit/loss.
Profit and loss appropriate account
It is prepared mainly by partnership firms.
May carry forward opening or closing balance from the previous accounting period.
It is prepared after the profit and loss account.
Item debited are appropriations of profit.
Based on the partnership agreement.
The matching principle is not followed.
Prepared to distribute net profits of a period among partners.
Updated on 24-Jul-2020 06:52:45
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