Why profit is a liability and loss is an assets
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Answer / syed mujeer ahmed
its simple friends
profit if comes in business either u have to distribute it the share holders or you should add up in your capital to increase or expand ur business so profit is considered as laibility
now coming to
loss it will be treated as asset because losses we have to recover and we cant distribute loss so so its an asset
if u have to recieve some money from someone and if he is not paying the money to u means he is a debtor to you and debtor comes under assets and if he is not paying the amount its called as bad debts so in future u have to receive money and whatever u recieve it will treated as asset
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al through profit is an asset to the company but it is
shown in the balance sheet liabilities side because
the company should pay to the equity share holders or
partners from the earned profit hence it is liability as
loss on assets as the assets get depriciated every year
for usuage of particular asset
|Is This Answer Correct ?||1 Yes||2 No|
Answer / biswajeet biswal
we knew that capital has credit balance and we show it liabilities side of balance sheet so when our profit increases at that time our capital also increases so we show it on liabilities side of balance sheet and in case of loss it is vice versa
|Is This Answer Correct ?||1 Yes||2 No|
Answer / kumaraswamy
according to the basic principles of accountancy profit
and loss are nominal accounts. "the rule is debit all
losses and expenses and credit all income and gains"
all assets show debit balances and all liabilities have
credit balances. going by this loss is a dedit balance and
shown as asset and profit is a credit balance to be shown
just apply the basics of accountancy and u get the answer.
no need for this much of debate on a simple issue!!!!
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Answer / shashi
how to iddentify personal , nomainal & real ac ?
|Is This Answer Correct ?||0 Yes||4 No|
Answer / chandresh sharma
Whatever cash you have in your hand is a liability, because
end of the day you will have to distribute among your share
holders or partners. On the other hand loss is an asset,
because, it tends to inflow of money from your partners and
|Is This Answer Correct ?||7 Yes||12 No|
Answer / manisha
Profit is an liability because at the end of the year we
are adding it into capital of the company which shown in
teh liability side of balance sheet while at the time of
dissolution of comapny we need to paid back the capital to
the member of the comapny so profit is an liability and
loss is an assets because asstes is deducting from the
capital as capital is shown in the liability side if u are
deducting anything from the liability side it means u are
giving the effect of assets side as per the pricepal of
so profit is an liabilty b'coz we need to paid back it to
|Is This Answer Correct ?||6 Yes||16 No|
Answer / rajesh
as per nominal account principle allexpenses and losses
should be debited and all incomes and gains shoud be
there is no question of losses debited and incomes credited
|Is This Answer Correct ?||8 Yes||22 No|
Answer / amit banerjee
Profit is an income that is to be distributed to the
desired personnels whereas Loss can be treated as an
expense hence it is shown in the asset side.
|Is This Answer Correct ?||6 Yes||32 No|
Answer / malik
profit is income so that it is asset.loss is not an asset
|Is This Answer Correct ?||14 Yes||213 No|
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