Why net profit is shown in the liability side of the balance sheet?

Questions by herebikash   answers by herebikash

Showing Answers 1 - 8 of 8 Answers

niki_1079

  • Jan 1st, 2010
 

Net Profit is the amount earned by the Owner and it is always added to the Capital. As Capital is liabilty of the firm/Co. therefore it is shown on the liability side of the balance sheet.

  Was this answer useful?  Yes

Meenu sharma

  • Nov 4th, 2014
 

liabilities

  Was this answer useful?  Yes

AKASH PANDA

  • Dec 5th, 2014
 

as we know net profit is added with capital and capital is treated liability side of the balance sheet so that it treated as liability side of the balance sheet .

  Was this answer useful?  Yes

gangadhar

  • Dec 29th, 2014
 

Net profit is a profit of the compnany but the amount earn by the capital so it has to be pay the shareholders so it is treated as liability.

  Was this answer useful?  Yes

prajwalprasanna

  • Mar 2nd, 2015
 

as per accounting concepts and conventions there is a concept in accounting called BUSINESS ENTITY CONCEPT which says business is separate from proprietor so when the proprietor contributes money to business it means business is borrowing money from outsider so it is liability to business so when the capital is liability even the profit earned is liability and repayable to the owner so is treated as liability as per accounting

  Was this answer useful?  Yes

Naveen

  • May 11th, 2017
 

Assume that I started a business with a capital 4000..... i made no transaction.. if I prepare a balance sheet for it how it will be balanced now?

  Was this answer useful?  Yes

rahul patidar

  • Oct 1st, 2021
 

If you not made any type of transaction it mean you have not earned any type of profit.So that not need to shown in balancesheet.

Code
  1.  

  Was this answer useful?  Yes

Give your answer:

If you think the above answer is not correct, Please select a reason and add your answer below.

 

Related Answered Questions

 

Related Open Questions