PROFIT AND LOSS APPROPRIATION ACCOUNT

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Narendra (Querist)
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27 March 2009 Sir,

Could you pls guide me what is profit & loss appropriation account and what is the purpose of it.

pls expalin in detail.

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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27 March 2009 An Income Statement, also called a Profit and Loss Statement (P&L), is a financial statement for companies that indicates how Revenue is transformed into net income. The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.
Whereas,
Using P & L Appropriation account would enable handling all the information relating to appropriation of profits through a separate account. But, when we come to reading the postings in the appropriation account as well as the Capital accounts, the only difference we can see is that "P & L a/c" is replaced by "P & L Appropriation a/c".

CA LOKESH KASAT, FCA, M.Com

CA LOKESH KASAT, FCA, M.Com (Expert)
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27 March 2009 Once P&L A/c is prepared. to do some adjustment with Net profit, pre-decided by management, a seprate A/c is prepared known as P&L Appropriation A/c.

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C A GROUP COACHING

C A GROUP COACHING (Expert)
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27 March 2009 How the Distribution of Net profit earned/shown as per P & L account is done is shown in P & L App.a/c

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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28 March 2009 nicely answeres

Laxmi Narayana Sahu

Laxmi Narayana Sahu (Expert)
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28 March 2009 Profit & Loss Appropriation Account is Prepared in order to know the utilization of the profits earned by the enterprises .Utilization of profits would mean that the amount left after the difference between the current years income & expenses along with the last years balance ,distributed as Dividend,transferred to reserve & balance left out at the end.