what is the difference between profit and loss and profit and loss appropriation
Difference between Profit and Loss A/c and Profit and Loss Appropriation A/c:
|S.No||Profit and Loss Account||Profit and Loss Appropriation Account|
|1||It is prepared after Trading A/c.||It is prepared after Profit and Loss A/c.|
|2||It shows the Net Profit of the year.||It shows how Net Profit is appropriated (distributed).|
|3||This account does not have opening and closing balances.||This account may have both opening and closing balances.|
|4||Items debited to this account are all expenses (charge against profit).||Items debited to this account are appropriations.|
Differences between Profit and Loss account and Profit and Loss Appropriationaccount-1. Profit and loss account is prepared for recording expenses, losses, and gains ofthe current uear, whereas profit and loss appropriation acount is prepared for recordingthe appropriation of profit i.e how the profits are utilized for various purposes such aspayment of dividend, etc.2. Profit and Loss account is always prepared whereas the profit and lossappropriation account is prepared only when there is appropriation of profits.3. The balance of profit and loss accounti.e net profit or loss is transfered toprofit and loss appropriation account. On the other hand the balance of Profit and LossAppropriation account is carried forward from year to year.4. Profit and loss accunt discloses the net profit or net loss before appropriationwhereas the closing balance of profit and loss appropriation account represents net profit or net loss afterappropriation.