AA-40 How to Make P&L Appropriation Account in Tally Prime

Step 1: Create Profit & Loss Appropriation Account

• Go to Gateway of Tally > Accounts Info > Ledgers > Create

• Name the ledger as Profit & Loss Appropriation Account

• Under Group, select Reserves and Surplus

• Keep other details default and save

Step 2: Record Transfer of Profit to P&L Appropriation Account

At the end of the year, after you have the Net Profit, you transfer it to the P&L Appropriation Account.

• Go to Gateway of Tally > Accounting Vouchers > Journal Voucher (F7)

• Debit Profit & Loss Account (with net profit amount)

• Credit Profit & Loss Appropriation Account

Step 3: Record Appropriations (like dividends, reserves, etc.)

Now, from the Profit & Loss Appropriation Account, you debit various appropriations such as:

• Transfer to General Reserve

• Dividend declared

• Provision for Tax

• Any other appropriations

Example entries:

• Debit P&L Appropriation Account

• Credit General Reserve or Dividend Payable or Provision for Tax

Step 4: View the P&L Appropriation Account report

• Go to Gateway of Tally > Display > Account Books > Ledger

• Select Profit & Loss Appropriation Account

• You will see all the transfers and appropriations

Optional: Automate Transfers Using Tally Features

You can also set up automatic transfer of net profit in Tally Prime through:

• Profit & Loss account settings

• Under Accounting Features, enable Use Profit & Loss Appropriation Account