Is amount of drawings shown in Profit and Loss appropriation account in partnership firm?



Answer:
No



Explanation:
In a partnership firm, the drawings made by partners are not shown in the Profit and Loss appropriation account. The Profit and Loss appropriation account is used to distribute the net profit among the partners according to the profit-sharing ratio agreed upon in the partnership agreement.



Reasons:
1. Drawings are personal withdrawals made by partners for their personal use and do not affect the calculation of net profit of the firm.
2. Including drawings in the Profit and Loss appropriation account would distort the true profit earned by the firm and misrepresent the financial position of the business.
3. Drawings are already accounted for separately in the capital accounts of the partners.



Impact:
Not showing drawings in the Profit and Loss appropriation account ensures that the distribution of profits among partners is done accurately and fairly based on their profit-sharing ratio. It also helps in maintaining transparency and clarity in the financial statements of the partnership firm.



Conclusion:
Therefore, the amount of drawings made by partners is not shown in the Profit and Loss appropriation account in a partnership firm. This practice ensures that the financial statements reflect the true and accurate financial position of the business.