The major differences between profit and loss account and profit and loss appropriate account are as follows −
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.
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.