Why we Add the net profit in the balance sheet ? Why we
shows profit in the liability side of the balance sheet?
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Answer Posted / sumayya
because profit is earned on the capital invested which is not the company's money.
capital is also like a liability and the profit should actually be given to the owner and the money is still there with the company so it is again a liab. for the company to pay the profit which is a return on the capital invested by the owner.
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