Different between profit and loss appropriation account and revaluation account
Answers
The main intention of preparing aprofit and loss appropriation account is to show the distribution of profits among the partners. It is debited with interest on capital and remuneration to partners and credited with the net profits b/d from the profit and loss account and interest on drawings.
profit and loss revaluation account :-
Revaluation account is a nominalaccount prepared for the purpose of distributing and transferring the profitor loss arising out of increase or decrease in the book value of assets and/ or liabilities of the partnership firm at the time of Change in profitsharing ratio, admission of a partner, retirement of a partner
P&L Appropriation A/c is used to show the distribution of profits between the partners of the firm as agreed between them, whether it is interest on capital, or the profit after debiting interest on capital. It is prepared at the end of financial year
But, Revaluation A/c is used to show the change in value of assets and liabilities and use them to pay off the liability so as to find do partners need to pay from their side for any liability left or will they get profit after selling the assets and paying all the liabilities. It is made at the time of winding up the partnership. The profit left after selling assets and paying off the liabilities is then distributed among the partners as per their agreed ratio.
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