Select the account that is prepared to ascertain the final figure of Profit and Loss to be distributed among the partners in case of a partnership firm.

Profit and Loss Appropriation Account

The correct answer is Option 2 - Profit and Loss Appropriation Account.

Profit and Loss Appropriation Account is the account that is prepared to ascertain the final figure of Profit and Loss to be distributed among the partners in case of a partnership firm.

In a partnership, additional adjustments need to be made, such as interest on drawings, interest on capital, partner salaries, and partner commissions. To facilitate these adjustments, it is customary to prepare a Profit and Loss Appropriation Account for the firm. This account helps determine the final amount of profit or loss to be distributed among the partners based on their agreed profit-sharing ratio. If the firm incurs a loss, partners are not entitled to receive any interest on capital, salary, or remuneration. These are allowed only when the firm has earned profit during the accounting year.