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Why loss shown in as Assets in Balance Sheet?
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AS per Business entity assumption owner and his business are consider to be two different persons.
Asset means anything which will do favour to the business in future. in the same manner liability means anything which will do unfavour to the business in future.
If the business is in the position of Loss means it is the duty of the owner to compensate it. it will do favour to the business in future so Loss is shown under the asset side of the balance sheet.
if the business is in the position of profit means it is the duty of the company to give the return on capital. it will do unfavour to the company so profit is shown under the liability side of the balance sheet.
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Answer / megha
Since it is a debit balance of P&L a/c it is shown in assets side.It is a type of fictitious asset. These are assets not represented by tangible possession or property.Example of fictitious assets are preliminary expenses,discount on issue of shares,debit balance in the profit&loss a/c shown on the assets side in the balance sheet.
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Answer / p. fayaz ahamad
profit or loss it should be transferred to the liabilities side of the balance sheet and it is deducted from the capital as less net loss
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