Question

Distinguish between charge against profit and appropriation of profit (any two points).

Hint:

A quick test: “If no profit, still payable?”—Yes → Charge; No → Appropriation.

Answer 1

Point 1: Position in accounts.
\emph{Charge} → recorded in Profit & Loss A/c as expense; reduces profit. \emph{Appropriation} → recorded in P& L \emph{Appropriation} A/c; allocates profit. Point 2: Compulsion.
\emph{Charge} is obligatory (must be paid irrespective of profit). \emph{Appropriation} is discretionary (depends on available profit). Point 3: Examples.
Charge: Interest on debentures, depreciation. Appropriation: Dividend, transfer to general reserve, bonus issue.
Final Answer: \[ \boxed{\text{Charge = before profit; Appropriation = after profit (with examples)}} \] % Quciktip