P&L ADJUSTMENT VS P&L APPROPRIATION

There are three stages:-

Profit and Loss Account first stage. What is termed to be first closure.

Profit and Loss Adjustment Account second stage .

Here one incorporates the adjustments at balance date that are needed
to sophisticate the first closure.
These are called Balance Date Adjustments.
Accruals come into play here.

Profit and Loss Appropriation Account.

This is the third and final closure.
When the second tier is closed.
Decisions are made as to how the distribution takes place.
Some profit can be distributed, the balance is carried forward in the Balance Sheet.