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why net profit shown liabilities side in balance sheet

Answer Posted / h.r. sreepada bhagi

As per 'Business Entity Concept', Assets minus external
liabilities is called Networth & it includes Capital,
Reserves & Surplus & Carried Forward balance of Profit. This
networth is the company's liability towards the
shareholders. In horizontal Balance Sheet it's shown on the
liabilities side & in vertical Balance Sheet it's shown
under Sources of Funds.

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