What is difference between profit and loss account and profit and loss appropriate account?

Banking & FinanceManagementCompanies/Organisations

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.

raja
Published on 24-Jul-2020 06:52:45
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