Difference between Profit and Loss Account and Profit and Loss Appropriation Account Class 12

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Are you looking for the difference between profit and loss account and profit and loss appropriation account as given in accounting of partnership firm – Fundamentals class 12 Accountancy.

I have summed up difference and explained in detail.

The distinction between Profit and Loss Account and Profit and Loss Appropriation Account Class 12

Following are the differences between these two accounts.

BasisProfit & Loss AccountProfit & Loss Appropriation Account
1.Stage of PreparationIt is prepared after Trading Account. it starts with gross profit (in credit side) or gross loss (in debit side) as determined by trading account.It is prepared after Profit and Loss Account. It starts with net profit (in credit side) and net loss (in debit side) as determined by profit and loss account.
2.ObjectiveIt is prepared to ascertain net profit or net loss.It is prepared to distribute the net profit among partners.
3.Nature of ItemsExpenses debited to this account are a charge against profitsExpenses debited to this account are the appropriation of profits such as interest on capital, drawings, remuneration to partners, etc.
4.Partnership Deed or AgreementThis account is not prepared on the basis of the partnership agreement, except for interest on the loan from partnersThis account is prepared on the basis of the partnership Agreement.
5.Matching PrincipleThe matching principle (i.e., matching of revenue against expenses) is followed while preparing this account.The matching principle is not followed while preparing this account.

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