Dear Prashant,

                         Profit & Loss appropriation  A/c is created after creation of profit & Loss A/c .

Profit and loss appropriation account is created for appropriation of profits.

In case of partnership firms, it is prepared to distribute the net profits among the partners. Interest on drawings will be added to the net profit (i.e., credited in P & L appropriation account)and the int on capital, commission, etc, are paid as per the terms of the partnership agreement (i.e., debited).  The  balance will be distributed  among the partners in the Profit sharing ratio...

P & L account is prepared to arrive at the net profit or loss of an organisation.

Once u have arrived at the net profits an entity can decide how to appropriate such profits either it can retain such profits,appropriate such profits as dividends or create a general reserve or some specific reserves.

Thus P & L appropriation is an account which shows the appropriation of profits arrived from P & L A/c.

Regards

Prasad R

Appropriation = Setting aside Money for a specific purpose

SO profit & loss appropriation account is only prepared for distribution of profit.