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Profit is a part of owner's equity and actually increase the owner's equity that's why shown under owner's equity heading in liability side of balance shee.
Owner's Equity xxxx
add:profit xxxx
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Net profit is a liability?
It is not because what makes you think what you have earned is not belonging to the company? with no profit, company will gone bankrupt easily if net profit is liability. if it is liability, who is the company owing the money to?
Why is net profit added back in capital on the liability side?
Because net profit is the increase in capital for the period of time, and must be added to capital to reflect its true value.
Where does retained earnings go?
Retained earnings is that part of current year's profit which is not distributed to share holders of company, so as it is a part of profit , it is shown under capital portion of liability side of balance sheet.
Why net profit is disclosed on liabili ty side of balance sheet?
because profit is earned on the capital invested which is not the company's money. capital is also like a liability and the profit should actually be given to the owner and the money is still there with the company so it is again a liab. for the company to pay the profit which is a return on the capital invested by the owner.
Is net profit an asset or liability?
In a way profit could be considered an asset but its a stretch. Profit is term used to describe the earnings left over after you subtract the expenses related to the earning of that profit. The retained earnings would actually be the asset. The term profit is just a way to tell if your business is making money (or profitable) and doesn't really fall into the asset category. You will not see profits on a balance sheet rather you will see earnings.
Where is Profit and Loss post in balance sheet?
In case of profit Liability side. In case of loss Asset side.
Why profit is at liability side?
Profit is part of owners equity that's why profit is shown as an addition to paid in capital or owners equity section and that's why it is also shown in liability side of balance sheet.
Why is unrealized gross profit considered a liability in the balance sheet?
Basically, unrealized gross profit is not an asset, liability, expense, revenue and owner equity. Because asset always record in DR side as a nature. Liability record on CR side but we don't have to pay any thing in unrealized gross profit. expense nature is DR revenue nature is CR but unrealized gross profit is expected to be an income after realizing. owner equity means to invest in business and unrealized gross profit is not an investment. So, we have to assume the unrealized gross profit as liability because it is mutually unearned. Unearned, it is an advance amount which is liability until we earned it. Similarly, unrealized is expected to be earned in future after collecting the installments of sales, as unearned is a part of liability so, unrealized gross profit is also a part of liability through unearned account.
Is general reserve fund placed in asset side in a balance sheet?
General reserves are part of profit of the company for usable in future so it is the liability of company and shown in liability side of balance sheet.
Net profit is a liability?
It is not because what makes you think what you have earned is not belonging to the company? with no profit, company will gone bankrupt easily if net profit is liability. if it is liability, who is the company owing the money to?
Why is net profit treated as a liability?
Net profit for a business is liability because it must be paid to equity holder and creditors.
Why is net profit added back in capital on the liability side?
Because net profit is the increase in capital for the period of time, and must be added to capital to reflect its true value.
Why the losses are recorded in the balancesheet of the assets sites?
see profit are ur liabilites.as u have to pay dividend from this profit.now if profit is on liability side then loss must be in the asset side otherwise the balance sheet will not give proper results.
Where does retained earnings go?
Retained earnings is that part of current year's profit which is not distributed to share holders of company, so as it is a part of profit , it is shown under capital portion of liability side of balance sheet.
Where does overdraft go to balance sheet or profit and loss account?
Bank overdraft is shown in balance sheet either as a negative amount of bank in asset side or at liability side of balance sheet.
Bad debts is a liability or an asset?
A bad debt is a expense which affects the owners equity as it is charged against the profit and loss account and it decreases the profit of the business.
Can a profit corporation also be a limited liability company?
Yes
