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why profit is a liability and loss is an asset?

Answer Posted / h.r. sreepada bhagi

Carried Forward profit is shown on the Liability side of the
Balance Sheet. Under Business Entity Concept of Accounting,
the shareholders, promoters or partners who have contributed
capital to the business unit are distinct from the business
unit itself and hence the balance of profit earned over the
years is due to them from the business unit.
Carried Forward loss is shown on the liabilities side of the
Balance Sheet & going by the above concept it's receivable
from the contributors of capital or is offset against their
capital. It's not a real asset.
B/fd loss can be distributed to the shareholders or partners
& B/fd loss can be offset against future profits.

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