Drawings in Partnership Firm
- Drawings made against profit are entered into Profit and Loss appropriation account in a partnership firm.
- This is done to ensure that the personal withdrawals made by the partners do not impact the calculation of the net profit of the partnership.
- By recording the drawings in the Profit and Loss appropriation account, the partners' withdrawals are separated from the business profits and losses.
- This helps in maintaining transparency in the financial statements and accurately reflecting the true performance of the partnership.
- It also aids in the distribution of profits among partners after considering their individual withdrawals during the financial year.
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