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why net profit will be added to the balance sheet? is there
any reason?
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Answer / ankit pathak
Net profit is added to the balance sheet on the liability
side because profit is the liability of the firm which they
have to pay out to the capital investors or the
shareholders for their contribution towards the firm.Hence
it is shown on the capital+liability side of the
balancesheet.
| Is This Answer Correct ? | 17 Yes | 3 No |
Answer / neelima
Net profit should be added to the balance sheet becos the
profits earned by the company has to distribute to the
respective share holders according to their ratios. here
the company is liable to pay the profits to the
shareholders in the form of dividends
| Is This Answer Correct ? | 12 Yes | 2 No |
Answer / madhavi
Balance Sheet represents the financial position of an
organisation. By looking into balance sheet one must be
able to know the financial status of a company..etc.
It contains the information of all the assets and
liabilities.Net profit will be added to the balance sheet
to give a clear picture of the financial position.
| Is This Answer Correct ? | 17 Yes | 12 No |
Answer / jamal
The reason of profit added in balance sheet is that. Asset=Liabilities+Owner's Equity.So the profit is the part of owner's equity thats why we added in balance sheet.
| Is This Answer Correct ? | 5 Yes | 1 No |
Answer / ziaul haq.s
Net Profit should add in liabilities side. bcoz
1.It should go to share holders
2.if we are not adding the net profit in to liabilities
then we can't equal the liabilities side into asset
side .bcoz net profit amount is there in asset side in the
form of another name.
| Is This Answer Correct ? | 2 Yes | 1 No |
Answer / mohan
Net profit after proposed dividends should go balance sheet under liabilities head under the subhead of Reserves and Surpluss as such profit is a retaining profit to be utilised for various circumstances such as capital expansion, meeting unforseen consequences after the date of approval of accounts by directors.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / mahantesh
Profit is a share holder profit that why it comes in
liability side
| Is This Answer Correct ? | 4 Yes | 6 No |
Answer / raghavendra
profit is nothing but a divident its part of the share
holder so due to this reason add to the capital in the
balance sheet
| Is This Answer Correct ? | 0 Yes | 2 No |
Answer / kamal
to know a clear picture of financial statement about a
organisation so it is added.further this is the owner's
equity so it added to the capital for for knowing total
equity of a company.
| Is This Answer Correct ? | 4 Yes | 8 No |
Answer / salimpasha
b/s reveals the financial position of the co ,through the
netprofit we know da clear picture of the co
| Is This Answer Correct ? | 0 Yes | 4 No |
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