In this Presentation, you will find the concept of Profit and Loss Appropriation Account along with practical questions.

1. FUNDAMENTALS OF PARTNERSHIP
Profit & Loss Appropriation Account
Prepared By
Preksha Mehta

2. PROFIT AND LOSS APPROPRIATION A/C
 Profit and loss appropriation is an extension
of profit and loss a/c.
 It is prepared to show appropriation /
distribution of net profits among the partners.
 It is a nominal a/c.

3. PROFIT AND LOSS APPROPRIATION A/C
 Profit & Loss A/c
 Format of Profit and Loss Appropriation A/c
Particulars Amount Particulars Amount
To Interest
on capital
To Salary to
partners
To Partners’
commission
To Reserve
To Divisible
profits
By Profit
and Loss
a/c (net
profit)
By Interest
on drawings
Particulars Amount Particulars Amount
To indirect
expenses
To net profit
By gross profit
By incomes

4. QUESTIONS
 A and B are partners in a
firm sharing profits equally.
Their capitals are Rs
200,000 and Rs 100,000
respectively. As per the
deed, Interest on capital is
allowed at the rate of 10%
p.a. Salary is Rs 40,000
for A and Rs 30,000 to B.
Net profits of the year were
Rs 150,000. Prepare profit
and loss appropriation a/c.
Also, determine the
amount of divisible profit.
Particular
s
Amount Particular
s
Amount
To
Interest
on capital
A-20,000
B-10,000
To Salary
A-40,000
B-30,000
To
Divisible
profits
A-25,000
B-25,000
30,000
70,000
50,000
By Profit
and Loss
a/c (net
profit)
150,000
150,000 150,000

5. QUESTIONS
1. A and B are partners in a firm sharing profits in the ratio 3:2.
Their capitals are Rs 250,000 and Rs 150,000. Interest on
capital is allowed at the rate of 5% per annum. Salary is Rs 500
per month to A and Rs 2000 per quarter to B. Interest on
drawings are Rs 300 for A and Rs 200 for B. Net profits for the
year were Rs 50000. Prepare profit and loss appropriation
account showing distribution of profits between the partners.
(Ans Divisible Profit Rs 16,500)
2. A and B are partners. The net divisible profit as per Profit and
Loss Appropriation A/c is Rs. 2,50,000. The total interest on
partner’s drawing is Rs. 4,000. A’s salary is Rs. 4,000 per
quarter and B’s salary is Rs. 40,000 per annum. Calculate the
net profit/loss earned during the year.
(Ans Rs 302,000)

6. THANK YOU