Why profit is a liability and loss is an assets
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Answer Posted / chandra kanth
profit is liability and loss is asset.Why means profis
should be distributed to share holedrs(as per business
entity concept business is differen from share
holders).when company needs to distribute or pay to
outsiders or shareholders that should be treated as
liability.Where as loss is an asset because loss will arise
when expenses are more than incomes.Here company incurrred
expenses that may give incomes in futture year also.so like
prepaid or deferred expenses loss also should be treated as
asset.
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