how appropriation accounts work
in general accounting appropriation accounts are mainly prepared by partnerships and limited liability companies llcs they are an extension of the profit and loss statement showing how the profits of a firm are allocated to shareholders or to increase reserves indicated in the balance sheet a company might appropriate money for short term or long term needs to finance things such as employee salaries research and development and dividends for a partnership the primary purpose of the appropriation account is to show how profits are distributed among the partners for an llc the appropriation account will start with profits before taxes and then subtract corporate taxes and dividends to arrive at retained profits government appropriation accounts come into play when they create their budgets appropriation credits are taken out of estimated revenues from taxes and trade and allocated to the proper agencies credits in appropriation accounts that are unused may be redistributed to other agencies or used for other purposes appropriations for the u s federal government are decided by congress through various committees the u s government s fiscal year runs from october 1 through september 30 of each calendar year real world example of appropriation accountsinvestors can monitor appropriations of publicly listed corporations by analyzing their cash flow statements cfs the cfs shows if a firm is generating enough cash to pay its debt obligations and fund its operating expenses here s a breakdown of how tobacco giant altria group inc mo a popular income stock appropriated its cash and profits in the nine months to sep 30 2018 