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why profit is a liability and loss is an asset?

Answer Posted / anudeep

hi
we know the first concept of accounting is entity concept
as per that concept owner is distinct from business

thats why in sole proprietaryship profit is added to capital
and loss is deducted from capital

like in companies and partnership also

loss can be deducted from capital or shown as asset in asset
side of the balance sheet

in case of companies loss can be duducted from reserves or
shown as asset

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