Interview Q9 - I am a Layman. I am a proprietor. Tell me why Profit is treated at Liability side and Loss is treated at Asset side of Balance Sheet?

Saturday, August 23, 2008

Hint - Business and Owner are both different. Profit is liability of business towards owner thats why it comes at Liability Side and vice-versa for Loss.

Question 9A - Why Loss is treated at Asset side instead of deducting it from Owners Equity or say why it is carried forward?

Hint - Loss is right of a business to recover it from business-man but as per rules it is carried forward for deducting it from Business profit of the next year.

Recently this question was asked from a CA in the interview by a very big Indian FMCG company (name withheld).


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