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Profit and loss appropriation account means showing the distribution of net profit among the shareholder or partners in the form of dividend or profit. It also shows the transfer of profit to various reserves and issue of bonus share. The profit and loss appropriation A/c is prepared after the preparation of the profit & loss a/c.
While closing the accounts for the financial year, the profit or loss has to be distributed and hence P&L Appropriation A/c is significant before closing the books.
