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Appropriation Account

The appropriation account is a section of the profit and loss account and is shown below it. The net profit is carried down to the credit side of the profit and loss appropriation account where the distribution of profits is shown. The appropriation account is prepared after the preparation of the profit and loss account but before the preparation of the balance sheet.

 

The layout of an appropriation account is as shown below:

 



$
$
$
Net profit



26,500
Add Interest on drawings:





Adam


120


Eve


80








200













26,700
Less Salary: Adam


1,500

Interest on capital:





Adam
3,200




Eve
2,000







5,200







6,700













20,000
Balance of profits shared:





Adam 3/5

12,000


Eve 2/5

8,000







20,000







See: The Profit and Loss Appropriation Account

Last Updated (Saturday, 11 September 2010 15:59)