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what is profit & Loss Appropriation A/c. why it is
prepered? what are its benefit for a company
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Answer Posted / hunny gupta
Profit and loss Appropriation A/C shows the appropriation
(distribution)of the profit calculated by preparing P&L A/c,
It' debit side shows items like the dividend proposed by the
company, provision for Corporate Dividend tax (on such
dividend), legal reserve and Interim Dividend.
While it's credit side shows the profit of P&L A/c, balance
of surplus of last year, provision no longer required.
The balancing figure, profit (Surplus)is
shown in the balance sheet under the head 'Reserves and
surplus'.
It should be noted that even though The Companies Act does
make it compulsory ti prepare this A/c, it is advisable to
do so because Profit & loss shows only expenses and charges
against profit, it does not shows it's appropriation.
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