what is the difference between profit & loss appropration an

4917 views 1 replies

 what is the difference between profit & loss appropration and profit & loss adjustment account?

Replies (1)

Appropriation account is the one which is opened for the distribution of hte profits of a yr between the one who have right over it, i.e. for dividend, transer to reserves, statutory or otherwise,  etc. It comes below the line items.

Appropriate means share or divide or distribute.  The purpose of this account is to enable distribution of profits among those entities who have a right over profits.
 

On the other hand, adjustment account is opened to make adjustments after the accounts for hte yr have been prepared of the errors of past yrs......

Say, an error relating to previous years being rectified now. If there is a profit on account of the rectification, it should pertain to the previous years and not the current period.  Therefore in such situations we make use of a temporary nominal account P & L account.  Since this is also a nominal account, it should also be closed at the end of the accounting period by transfer to P & L appropriation account. Where there is no separate appropriation account it should be transferred to Capital a/c since that is where the profits have gone...........

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
06 July 2026
Accountant

Agarwal Anoop and Associates

Noida

CA Final

View Details
Company
ARTICLESHIP 07 July 2026
Articleship

Jawahar and Associates Chartered Accountants

Hyderabad

CA Inter

View Details
Company
29 June 2026
Accountant (Finance & Compliance)

TRIEYEZ

Kolkata

CA

View Details
Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 27 June 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
19 June 2026
Accounts Executive

Getfive Advisors Pvt. Ltd.

Ahmedabad

CA Inter

View Details
Company
24 June 2026
Senior Account (VA Client Operations)

Karbon Business

Bengaluru

CA Inter

View Details
Company
Featured 15 June 2026
Senior Auditor

N. Dhawan & Co

New Delhi

CA Inter

View Details