Question

Prepare profit and loss appreciation account

Answer 1

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As the name suggests - Profit & Loss "Appropriation" Account.
Basically in lay man's term it is an account prepared to show how the company appropriates or distributes the profit earned for a relevant financial year.
Let's say that if my company earned Rs 10,00,000 as profit for the F/Y 2015 then, in that profit some of the amount is let's say transferred to some General Reserve say Rs 2,00,000 and Rs 1,00,000 is kept for distribution as dividend (Either equity or preference or both) then the balance amount of profit earned shall be the amount transferred to the Profit & Loss A/C

This account preparation is the last step ie after charging the appropriate depreciation, interest and most importantly statutory taxes.
Then the Profit After Tax and Adjustments (also referred to as PAT) is appropriated into various other ledgers through P&L Appropriation A/C.

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.