Remember :-

P & L Appropriation Account is to be prepared when Distributable/Divisible Profit or Loss is to be calculated.

When Distributable/Divisible Profit or Loss is given in Question, then P & L Appropriation Account will not be
prepared.
Actually P & L Appropriation Account an extension (next step) of P&L A/c.
4
Dr. P & L Account Cr.
To Trading A/c (Gross Loss b/d) ✓ By Trading A/c (Gross Profit b/d ) ✓
To Expenses (to outsiders) ✓ By Incomes (from outsiders) ✓
To Interest on Partner’s Loan ✓ By Interest on Loan (given)
To Rent to Partner ✓ to Partner(s) ✓
To Interest on Partner’s Capital Charge Against
(when it is a Charge) ✓ Profit
To P&L Appropriation A/c By P&L Appropriation A/c
(Cr > Dr. = Net Profit c/d) b/a (Dr > Cr. = Net Loss c/d) b/a
TOTAL TOTAL
Dr. P & L Appropriation Account Cr.
To P&L A/c (Net Loss b/d) ✓ By P&L A/c (Net Profit b/d) ✓
To Interest on Partner’s Capital By Interest on Partners’ Drawings
(when it is an appropriation) Subhash + Vishwas ✓
Subhash + Vishwas ✓
To Remuneration to Partner(S/B/C)
Subhash + Vishwas ✓
To General Reserve ✓
To Manager’s Commission ✓ By Partners’ Current/Capital A/c
To Partners’ Current/Capital A/c (Divisible Loss =Dr > Cr. =In PSR
(Divisible Profit = Cr .> Dr.=In PSR Subhash ✓
Subhash ✓ Vishwas ✓ ✓
Vishwas ✓ ✓
Total Total
 Basis C h a rge A ga i n st P ro f i t A p p ro p r i at i o n o f P ro f i t
1.Meaning Expenses/Payments which are Expenses/Payments which
to be paid by firm in all 3 cases are to be paid by firm only
of Profit or Loss or No loss – in cases of Profit, are
No profit, are called Charges. called Appropriation.
2.Recording Charges are recorded in Appropriations are recorded in
P&L Account. P&L Appropriation Account.
3.Priority Charges are allowed before Appropriations are allowed
appropriations. after charges.
4 . Effe c t Charges affect both Net P&L Appropriations affect only
and Divisible P&L. Divisible P&L.
5.Examples I n t e r e s t o n P a r t n e r ’s L o a n , Remuneration to Partner(s),
R e n t t o P a r t n e r. Interest on Partners’ Capital.