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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 / monty
hi feriend
profit should be shown in liability side why because-
whenever the company makes profit in a particular year, 1st
it have to distribute that profit among the share holders
(eqity+preference) and also it should be distributed to the
debenture holders in the form of Interest. according to
business antity concept of accointing.
| Is This Answer Correct ? | 13 Yes | 3 No |
Answer / keyul gandhi
Dear Mr. Venu
Profit of the company is a liabilility because this profit
need to be distributed to the partnes or share holders or
to the porpritor, which is not yet done
when we prepare final accounts we just arrive at the proft
figure and not the actual distribution of the profit.
Thanks
| Is This Answer Correct ? | 12 Yes | 3 No |
Answer / sooraj
hai eveery one....
my answer is as follows.
net profit treated as a liability.the owner contribute
capital to the organisation,so it's the duty of the company
to return something for their capital,because the owner
carries lot of risk for their funds........so the company
give a part of profit to the owners for facing that risk......
| Is This Answer Correct ? | 9 Yes | 1 No |
Answer / anshu
because it is a liability share holder or proprietor is
owner of company that why it pay to them only
| Is This Answer Correct ? | 8 Yes | 5 No |
Answer / samir manchekar
business & owner are different things as per seperate entity concept.
when owner brings capital to the business then it is liability for the business so it is shown in the balance sheet at the liability side busines has to give something return for their for their capital and the net profit is profit for the owner but it is liability for the company thats y its added to the capital
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / 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.
| Is This Answer Correct ? | 1 Yes | 1 No |
Answer / hems
Because owner or propriter of a company make all prepaid
expense to comtinue companies affairs..
when it profit obiasily it should be addjest is capital
account or visa-virsa.
it is not a particular theory.. but an example..
HEMS......
| Is This Answer Correct ? | 1 Yes | 2 No |
Answer / saleh baloch
It is because the company owe its owner, partners and shareholder something at the end of the year and that is profit/ Net profit. so , it is a liability for which the company is liable to the organization..
Hope I answered it well.
Saleh
| Is This Answer Correct ? | 1 Yes | 2 No |
Answer / venu
hi anshu,
no ya..that is a prfoit to the company...Then why
it is liablty....
i want some more clearnce please......
Thank u,
Venu
| Is This Answer Correct ? | 4 Yes | 6 No |
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