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Profit and loss account

This query is : Resolved 

25 June 2011 Please guid me .How to transfer the balance of profit and loss to capital account of partners. As Profit and loss is the primary group and can not be taken for journal entry . Which accounr should be prapared under this head to transfer the balnce

25 June 2011 in accounting software make an indirect expense account named as "net profit" and use journal to debit net profit and credit capital account.

26 June 2011 In this case, Partners Capital account is prepared. Debiting the profit n loss A/c, the profit will be credited to Partners Cap A/c in the ratio as prescribed.

26 June 2011 agreed with Gurkiran Singhji

26 June 2011 The important thing is which software you are using. If you doing accounting through a software then the replies given by the other experts are correct.

26 June 2011 you can transfer by journal entry. i am doing by journal entry.

26 June 2011 First create Profit/loss Appropriation A/c. Debit the same while crediting the amount in partners capital a/c in profit or loss sharing ratio.

26 June 2011 P&L Appropriation A/c or P&L A/c and other ways can also be there.Such as from P&L A/c the surplus or deficit can be either transferred to partners cap A/c(in their profit sharing ratio)in case of partnership or else from P&L Appropraition account can be made for appropriation of profits (in their profit sharing ratio)among partners. But atlast the impact will be on Capital Accounts in Balance Sheet. Also there is also not a compulsion to follow a particular way.

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