Why profit is a liability and loss is an assets
- 20 Answers
- 104757 Views
- Banesco Seguros, FactSet Systems, IIM, South Indian Bank, I also Faced
- E-Mail Answers
Answers were Sorted based on User's Feedback
al through profit is an asset to the company but it is
shown in the balance sheet liabilities side because
the company should pay to the equity share holders or
partners from the earned profit hence it is liability as
loss on assets as the assets get depriciated every year
for usuage of particular asset
| Is This Answer Correct ? | 1 Yes | 2 No |
Answer / biswajeet biswal
we knew that capital has credit balance and we show it liabilities side of balance sheet so when our profit increases at that time our capital also increases so we show it on liabilities side of balance sheet and in case of loss it is vice versa
| Is This Answer Correct ? | 1 Yes | 2 No |
Answer / sunil kumar pattuvakkaran
According to Separate entity concept Owner & the business
are not one& the same. The company is entirely different
from its owners.
When Business making profit ,its should be liable to give that profit to Partners.Hence its a liability in the view of Business Firm.When business making loss, its partners is liable to give that amount to business.I.E business wants to that much amount recovered from partners.So Loss is asset , in the view of business firm.
| Is This Answer Correct ? | 1 Yes | 2 No |
Answer / kumaraswamy
according to the basic principles of accountancy profit
and loss are nominal accounts. "the rule is debit all
losses and expenses and credit all income and gains"
all assets show debit balances and all liabilities have
credit balances. going by this loss is a dedit balance and
shown as asset and profit is a credit balance to be shown
as liability.
just apply the basics of accountancy and u get the answer.
no need for this much of debate on a simple issue!!!!
| Is This Answer Correct ? | 1 Yes | 4 No |
Answer / shashi
how to iddentify personal , nomainal & real ac ?
| Is This Answer Correct ? | 0 Yes | 4 No |
Answer / chandresh sharma
Whatever cash you have in your hand is a liability, because
end of the day you will have to distribute among your share
holders or partners. On the other hand loss is an asset,
because, it tends to inflow of money from your partners and
share holders.
| Is This Answer Correct ? | 7 Yes | 12 No |
Answer / manisha
Profit is an liability because at the end of the year we
are adding it into capital of the company which shown in
teh liability side of balance sheet while at the time of
dissolution of comapny we need to paid back the capital to
the member of the comapny so profit is an liability and
loss is an assets because asstes is deducting from the
capital as capital is shown in the liability side if u are
deducting anything from the liability side it means u are
giving the effect of assets side as per the pricepal of
accounts.
so profit is an liabilty b'coz we need to paid back it to
the members
| Is This Answer Correct ? | 6 Yes | 16 No |
Answer / rajesh
as per nominal account principle allexpenses and losses
should be debited and all incomes and gains shoud be
credited
there is no question of losses debited and incomes credited
| Is This Answer Correct ? | 8 Yes | 22 No |
Answer / amit banerjee
Profit is an income that is to be distributed to the
desired personnels whereas Loss can be treated as an
expense hence it is shown in the asset side.
| Is This Answer Correct ? | 6 Yes | 32 No |
Answer / malik
profit is income so that it is asset.loss is not an asset
| Is This Answer Correct ? | 14 Yes | 213 No |
what are the aspects an auditor has to see when he/she is doing the Purchase,Sales and Journal Vouching
PLEASE SEND ME WHAT IS ENTRY OF CHEQUE DISHOUNER
suppose you are going to start new financial year then What treatment you will do of previous year balence sheet ( like previous year prepaid,provision etc) in current financial year.
sale tax which place effected
Deferred tax
What do you understand by the Term Capital Gains Used in the Income Tax Act ? What are the rules regarding exemption of Capital Gains ?
tell about friendship
what Trial Balance? state the difference bewtten Gross Trail balance & Net trail Balance?
What are the 3 Basic Rules in Accounting.
167 Answers AAA, ABC, Accenture, Amba Research, Birla Sun Life, CTS, CWDF, DELL, Franklin Templeton, iGate, IHP, JPMorgan Chase, Lexi Pens, Mastek, Trinity Technologies, VC Engineering,
in what form is crr kept in RBI?
What is Share?
I PURCHASE A GOODS FROM OUTSIDE STATE WORTH RS.50000 & PAY FREIGHT RS.5000 PAY 2% C.S.T RS.1000 INVOCE VALUE SHOWN TOTAL=56000 ST-38 FORM VALUE RS.56000. DOES WE INCULDE THE FREIGHT ENTRY. WHAT ENTRY WE WILL DO. PLEASE
3 Answers Bank Of America, JPMorgan Chase,
Audit 
