why profit is a liability and loss is an asset?

Answers were Sorted based on User's Feedback



why profit is a liability and loss is an asset?..

Answer / guest

Because profit is an addition to the capital of the
entityand capital is aliability of any business having a
legal separate entity. Loss reduces the capital, hence the
liability decreases .

Is This Answer Correct ?    10 Yes 2 No

why profit is a liability and loss is an asset?..

Answer / roshan

profit is a liability to company bzs it should be
distrebuted to share holders
but not in case of loss means reducing in the capital

Is This Answer Correct ?    7 Yes 2 No

why profit is a liability and loss is an asset?..

Answer / anudeep

hi
we know the first concept of accounting is entity concept
as per that concept owner is distinct from business

thats why in sole proprietaryship profit is added to capital
and loss is deducted from capital

like in companies and partnership also

loss can be deducted from capital or shown as asset in asset
side of the balance sheet

in case of companies loss can be duducted from reserves or
shown as asset

Is This Answer Correct ?    5 Yes 2 No

why profit is a liability and loss is an asset?..

Answer / javid

i ill go to Roshan, profit is liability to the company b'coz
its should disturbuted to share holder

Is This Answer Correct ?    4 Yes 1 No

why profit is a liability and loss is an asset?..

Answer / h.r. sreepada bhagi

Carried Forward profit is shown on the Liability side of the
Balance Sheet. Under Business Entity Concept of Accounting,
the shareholders, promoters or partners who have contributed
capital to the business unit are distinct from the business
unit itself and hence the balance of profit earned over the
years is due to them from the business unit.
Carried Forward loss is shown on the liabilities side of the
Balance Sheet & going by the above concept it's receivable
from the contributors of capital or is offset against their
capital. It's not a real asset.
B/fd loss can be distributed to the shareholders or partners
& B/fd loss can be offset against future profits.

Is This Answer Correct ?    4 Yes 2 No

Post New Answer

More Accounting General Interview Questions

why net profit shown liabilities side in balance sheet

9 Answers   DuPont, FactSet Systems,


what are the diffrances between rules of accounting & principal of account?

2 Answers  


how to reverse the receipt cash entry & contra is also passed for it in tally erp 9

1 Answers  


In the case of stock transfer from one branch to another branch any reverse credit is applicable.

0 Answers  


sir, i m working in an ngo as accountant but new. pleas clear my doubt in tally. suppose 'a' salary is 5000. he taken 3000 advance from salary and not returned. i paid a cheque next month rest 2000. 'b' salary is 10000, taken 5000 advance from salary and returned so i paid him 10000 total salary. what all to do in tally. is the following procedure is ok or not?

5 Answers   Banking,






what is the due date of 28th feb

0 Answers  


SALES BOOK IS A PART OF

1 Answers  


Accounting periode is normaly one year, bot accounting periode is for 5 year is possible or not?plz list the name of organistaion whose accounting periode is 5 year

1 Answers  


What is the treatment of loan and its interest in trading profit and loss ,balance sheet

3 Answers  


What information is included in a bill for services?

0 Answers  


Why Capital is Posted in the credit side? Concept of it briefly .

4 Answers  


Difference between Journal and Journal Proper???

1 Answers  


Categories