why we are considering the net profit as liable in balance
sheet
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Answer / ankesh gupta
Because in accounts we separately treat enterpreneur and
business.net profit is earned by business and then its
becomes liability of the business to pass it on to
enterpreneur.so net profit is added to capital of the
business.
by ankesh gupta
email id:- gupta_ankesh@rediffmail.com
any adition or alteration will be highly appreciated.
| Is This Answer Correct ? | 8 Yes | 0 No |
Answer / rosha
we treat net profit is liable to company because that must
be distributed to share holders
| Is This Answer Correct ? | 6 Yes | 1 No |
Answer / manojjain1525
there are sum generally accepted accounting principles and
in those principles there is one self entity concept it says
that the business is treated as self entity ( individual
person)and the proprietor is the one who provide cap to
business and whenever there will be profit that profit will
be treated as the liability of the business hence the net
profit is always shown in the liability side of the balance
sheet.
manojjain1525@gmail.com
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / shiva
According to Accounting Standards, we should treat,
Business is separate from Enterpenuer. the Net profit,
which is gained by from the business in the Patriculat
peroid after provisions for some reserve. this net profit
should share to the Partners or share holders. so, this is
laibility and should shown in the laibility side to add to
the capital.
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / k. phalguna rao
Ex: A starded business with the name of ABC company with
investment of Rs. 1,00,000/-
so here A is owne of the company
what ever his investment to the ABC company is called
capital (liable to the company)
Note: Profit is return of Investment of the Owner for his
investment as a capital of Rs. 1,00,000/- in the business
so that profit belongs to the owner of the co not to the
ABC co., in the year end
hence profit will be shown in liabilities which will be
added to the capital
for next f/y capital will as follows
100000 + this year profit(Ex. 10% 10000) = 1,10,000.00
| Is This Answer Correct ? | 1 Yes | 0 No |
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