What Is The Reason For Preparing A Profit and Loss Appropriation Account/Statement For A Partnership and Why Not For a Sole Proprietorship.
| Why do I need to prepare the Profit & Loss Appropriation for a partnership which is not required under a sole proprietorship organization:Answer:
Compared to a partnership there is no necessity to prepare a profit and loss appropriation account as the profit and loss appropriation account is basically to set up the SHARE OUT of the profits/(loss) of the business amongst the partners As the partnership itself is not taxed on its profit and the partners are taxed individually based on their share of profits (re: share of profits, interest on capital and salaries), the preparation of such profit and loss appropriations will facilitate the taxing of the individual partners. |
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