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Charge against Profits

When Profit ...

Question

When Profit & Loss Appropriation Account is prepared?

A

For proprietorship.

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B

For partnership firm.

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C

Both A and B

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D

None of the above.

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Solution

The correct option is B For partnership firm.
Profit and loss Appropriation account is prepared for partnership firm. It is an extension of profit and loss account. It is used for allocation and distribution of Net profit among partners, reserves and dividends. It Is usually prepared after preparing Profit and loss account.

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Similar questions

Q. (Profit and Loss Appropriation Account).

X

Y

started business on 1st April, 2017 with capitals of

R s . 5, 00, 000

each As per the Partnership Deed, both

X

Y

are to get monthly salary of

R s . 10, 000

each and interest on capitals @

10 %

p.a. Drawings during the year were

X - R s . 60, 000

Y - R s .1, 00, 000

; interest being chargeable @

10 %

p.a.
During the year, the firm incurred a loss of

R s . 2, 00, 000

.
Pass Journal entries for the above and prepare Profit and Loss Appropriation Account. The Finn closes its accounts on 31st March, every year.

Q. Why is Profit and Loss Appropriation Account prepared?

Q. (Profit and Loss Appropriation Account).

A

B

started a business on 1st April, 2017 with capitals of

R s . 3, 00, 000

R s . 2, 00, 000

respectively. According to the Partnership Deed, B is to get salary of

R s . 5, 000

A

10 %

commission on Profit after allowing salary to

B

and interest is to be allowed on capitals @

6 %

p.a. Profit-sharing ratio`between the two partners is

3 : 2

. During the year, the firm earned a profit of

R s . 2, 50, 000

.
Pass Journal entries for division of profits and prepare Profit and Loss Appropriation Account. The firm doses its accounts on 31st March every year.

Q. X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were : X ₹5,00,000; Y ₹ 5,00,000 and Z ₹ 2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of ₹ 2,000 per month. The profit of the firm for the year ended 31st March, 2018 after debiting Z's salary was ₹ 4,00,000.
Prepare Profit and Loss Appropriation Account.

Q. A and B are partners. A's Capital is ₹ 1,00,000 and B's Capital is ₹ 60,000. Interest on capital is payable @ 6% p.a. B is entitled to a salary of ₹ 3,000 per month. Profit for the current year before interest and salary to B is ₹ 80,000.
Prepare Profit and Loss Appropriation Account.

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