Question

Answer the question.
What is Profit and Loss Appropriation Account?

Answer 1

In case of sole proprietorship, there is only one owner and net profit is transferred to the capital account. But in case of partnership, there are a number of owners(partners) who have various claims on profits viz salaries, interest on capital, interest on loan, commission, etc. To facilitate the distribution of net profit, Profit and Loss Appropriation A/c is prepared.