Answer Posted / maruthimuralidharan
AS per Business entity assumption owner and his business are consider to be two different persons.
Asset means anything which will do favour to the business in future. in the same manner liability means anything which will do unfavour to the business in future.
If the business is in the position of Loss means it is the duty of the owner to compensate it. it will do favour to the business in future so Loss is shown under the asset side of the balance sheet.
if the business is in the position of profit means it is the duty of the company to give the return on capital. it will do unfavour to the company so profit is shown under the liability side of the balance sheet.
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