What is an Appropriation Account?

An appropriation account is used by a government to store the funds allocated to an agency or project. When funds are used for the designated purpose, the amount stated in this account is reduced. If the funds stored in an appropriation account are unused as of the end of a budget period, the funds are typically reallocated elsewhere.

An appropriation account can also be used by a business, to allocate retained earnings for a specific purpose. This is done in order to make it clear that the appropriated funds are intended for a specific use, rather than being distributed to shareholders or used for some other purpose. Appropriations are commonly used for expansion projects or loan repayments, which require a substantial funding commitment.