distinguish between profit and loss account and profit and loss appropriation account
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A profit and loss account shows how the business has made its profit I.e. Sales less cost of sales (also called the trading account) less expenses and overheads equals profit.
An appropriation account can then show how the profit has then been distributed among the business owners or others with any financial or proprietorial interest. For example if the business is an unequal partnership with different amounts invested by business partners you would expect there to be proportionate shares for at least some of the distribution of profit also if there was a retired partner who had chosen to leave money in the business they would expect a return if it had not been recognised as an interest cost.
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An appropriation account can then show how the profit has then been distributed among the business owners or others with any financial or proprietorial interest. For example if the business is an unequal partnership with different amounts invested by business partners you would expect there to be proportionate shares for at least some of the distribution of profit also if there was a retired partner who had chosen to leave money in the business they would expect a return if it had not been recognised as an interest cost.
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i have attached the comparison chart
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hope its useful..!!!!!!!!!
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