why net profit shown liabilities side in balance sheet
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Answer / 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.
| Is This Answer Correct ? | 55 Yes | 8 No |
Answer / nishant kumar
Because Profit is liability of the business for its
propriters or share holders.
| Is This Answer Correct ? | 37 Yes | 3 No |
Company is an artificial human created by Owner. Company has
to pay this net profit to Owner or Equity share holders. So
it will be shown in balance sheet liabilities side.
Capital A/c XXXXX
+Net profit xxxx
-------
XXXXXX
--------
As per owner or Equity share holder it's an income.
| Is This Answer Correct ? | 24 Yes | 4 No |
Answer / bejjenki naveen
according to accounting terms that whenever you get net profit you transfer that to liability side,because you have to pay this(net profit) to your owner or shareholders...,Thus we always consider that net profit is liability of the company...,
| Is This Answer Correct ? | 17 Yes | 4 No |
Answer / ravindranath
share capital and reserves belongs to shareholders.company has to pay return on its capital to shareholder after meeting all the requirements.so it is belong to shareholder.so company is liable to its shareholder.so it becomes liability to the company
| Is This Answer Correct ? | 8 Yes | 0 No |
Answer / vimal mishra
Liablities includes in Capital,Reserves & Surplus & Carried Forward balance of Profit.
| Is This Answer Correct ? | 7 Yes | 7 No |
Answer / wangda.tenzin
net profit is liability of the business because it is reward
for the owner for their capital investment
| Is This Answer Correct ? | 1 Yes | 1 No |
Liablities includes in Capital,Reserves & Surplus & Carried
Forward balance of Profit
| Is This Answer Correct ? | 3 Yes | 7 No |
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