Question

Distinguish between profit &loss Appropriation account and profit &loss Adjustment account??

Answer 1

1. Profit and loss account is made when there is loss or profit in the company .It is made after trading account. Whereas profit and loss appropriation is made when there is only profit in the company . It is an extension to profit and loss account

2. Profit and loss  account contain items which are charge against the profit . Whereas profit and loss appropriation account are appropriations of profit

3. Profit and loss account follows the matching principle ( revenue =expenses) . Whereas in profit and loss appropriation account , this principle is not followed.

4. Profit and loss account neither have opening or closing balances. profit and loss appropriation account contains both opening and closing balances