Why profit is a liability and loss is an assets
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Answer Posted / ankur
THE ITEM'S SHOWN IN THE LIABILITY SIDE IS THE LIABILITY OF
THE BUSINESS BECAUSE THESE AMOUNTS SIGNIFISE THE AMT. TO BE
PAID AND THE ITEMS SHOWN IN THE DEBIT SIDE IS THE RIGHT OF
THE PERSON FROM WHICH THEY CAN RECOVER THEIR AMOUNT.
BECAUSE OF THE ABOVE EXPLANATION IT CAN BE UNDERSTOOD THAT
PROFIT IS THE AMOUNT WHICH THE BUSINESMAN HAS NOT TAKEN OUT
AND THEREFORE IT A LIABILITY TO A BUSINESS AS LIKE CAPITAL
AND
LOSSES IS THE RESULT OF MISUSING THE FUNDS OF BUSINESS MAN
AND SHOWS THE RESULT OF THE RISK TAKEN BY BUSINESS MAN AND
ALSO SIGNIFIES THE AMOUNT OF RIGHT ON THIS LOSS.
THEREFORE LOSS IS SHOWN IN THE ASSET SIDE.
HENCE ASSET SIDE THE RIGHT OF THE OWNER IN THE
PROPORTIONATE AMOUNT INVESTED.
| Is This Answer Correct ? | 11 Yes | 8 No |
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