Why profit and loss appropriation account of nominal nature?
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Profit and loss appropriation account refers to that account which is prepared by firm to distribute profits and losses between partners of partnership....
It is nominal in nature .....
As nominal account refers to recording all expenses and incomes ...
Nominal rule of accountancy is ...
Debit all expenses and losses
Credit all income and gains...
P and L appropriation account is nominal as it records all expenses and losses of firm during a year ....
Dr side of this account records all expenses
while cr side records all incomes and gains .....
If credit side i.e income side more than debit side i.e expense side ....It means its profit and it distribute between partners ....or if debit side is greater than credit side ...than it means loss ....
Hence due to recording of all incomes and expenses and distribution of gains/profit and losses .......p and l appropriation account said to be nominal account...
Hope its helps u ..✌️✌️☺️
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