Cambrige Notes: Principles of Accounting: 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

• 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 Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes.