Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 16 - No. 16)
What is the purpose of an 'appropriation account' in a partnership's financial statements?
To calculate the net profit or loss.
To distribute the profit/loss among the partners.
To record the partnership's assets and liabilities.
To track the cash inflows and outflows of the business.
Explanation
The appropriation account shows how the net profit is distributed among the partners, considering elements like interest on capital, salaries, and profit-sharing ratios.
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