Treatment of Bonus in Final Accounts

WaALAIKUMUSSALAM WA REHMATULLAAH...

First of all, sorry for late reply. I's in Lahore on an official meeting.

Well, you asked about BONUS. Let me explain it in detail>>>

1....

BONUS FUNDS, BONUS TO SHAREHOLDERS(IN CASH FORM), or just the word BONUS >>> If anyone of these words appears in questions, IT SHOULD BE SETTLED THROUGH Profit & Loss Appropriation Account...

BONUS TO EMPLOYEES >>> It should be settled through Profit and Loss Account... >>> because Bonus to employees is considered as expense (just like salary).....so it is expensed out through Profit and Loss Account...

Where as BONUS FUND, BONUS TO SHAREHOLDERS are considered as APPROPRIATION / DISTRIBUTION OF PROFITS >>>So it is settled through Profit and Loss Appropriation Account...

3...

If only the word BONUS is mentioned>>> It should be treated as>>> Bonus to shareholders <<< As it is an APPROPRIATION OF PROFITS >>> So Profit and Loss Appropriation Account should be used...

Hope you got the exact information....INSYA ALLAAH...:-)

Do all the best...

AssalamUalaikum....:-)