Principles of Accounting: The Appropriation Account

////Principles of Accounting: The Appropriation Account

Principles of Accounting: The Appropriation Account

ZIMSEC O Level Principles of Accounting: Accounting for Partnerships:The Appropriation Account

  • Apart from a few nuances partnerships prepare normal financial statements
  • These are almost indistinguishable from those of Sole Traders
  • They include the usual Income Statement ( Trading and Profit and Loss Account) and the Statement of Financial Position
  • If this is a manufacturing partnership the Manufacturing Account is also prepared
  • In addition to these and Appropriation Account is also prepared
  • It is usually prepared after or as part of the Income Statement
  • If you prepare it as part of the Income statement remember to include it in the heading
  • For example:

Income Statement and Appropriation Account for the year ended 20X8

  • The Appropriation account is used to show the share of profits, any interest on capital, salaries, interest on drawings etc that are attributable to each of the partners
  • The corresponding entries are shown in the Current Account/Capital Account (in instances where a fluctuating capital balance is used)

The format of an appropriation account

$$$
Net Profit transferred from the Profit and Loss Account50 000
Interest on Drawings: Tawanda500
Calvin

1 000

1 500

51 500
Less:
Salary: Calvin4 000
Interest on capitals:
Tawanda1 000
Calvin

3 000

15 000

(19 000)

32 500

Balances of profits shared:
Tawanda (60%)19 500
Calvin (60%)13 000

32 500

  • The above is an example of what an Appropriation account ought to look like
  • An example question involving an Appropriation Account can be found here

To access more topics go to the Principles of Accounts Notes.

By |2018-03-05T10:07:50+00:00March 5th, 2018|Notes, Ordinary Level Notes, Principles of Accounts Notes|Comments Off on Principles of Accounting: The Appropriation Account

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He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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