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If net profit is a profit why does it appear on the
liability side of the balance sheet

Question Posted / kunwar sahni

Answers were Sorted based on User's Feedback



If net profit is a profit why does it appear on the liability side of the balance sheet..

Answer / manoj singh negi (amrapali ins

It's appear on the liability side because it's the result
of capital investment of a company and capital is a
libiality for business (because of business entity
concept). whatever capital invested by owner he want some
return form it, thatwhy net profit become liability for
business, it is so because business have to pay this(net
profit) to the owner.

Is This Answer Correct ?    40 Yes 1 No

If net profit is a profit why does it appear on the liability side of the balance sheet..

Answer / moti

because capital is treated as liablities in accounts and
the treatment of net loss or profit is either substracted
or added in capital for knowing the increment of capital
or decrement of capital.

Is This Answer Correct ?    5 Yes 0 No

If net profit is a profit why does it appear on the liability side of the balance sheet..

Answer / megha arora

A bussiness/organisation/company is not a natural entity.
It runs on the capital provided by its
members/owners/shareholders etc.So whatever is the profit
is actuaaly of these persons.So its a liability.

Is This Answer Correct ?    5 Yes 0 No

If net profit is a profit why does it appear on the liability side of the balance sheet..

Answer / prasanta

Profit is regarded as the lifeblood of the company and also
for the existence of business profit is the integral
part,so whenever a business man investing money into the
business he is always expecting returns for running his
business smoothly .As both owner and business both are
separate from each other that capital investment as well as
return from this became the liability of the business.

Is This Answer Correct ?    4 Yes 0 No

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