Why net profit/net loss is added/subtracted to the capital respectively , as capital is a liability that the b/s needs to repay to its owners and this can be done if b/s had profit only even then we add the profit to the capital and increase the liability more.Why?

Dear Student,

We add profit or deduct loss from the Capital because ultimately if there is a profit we are required to pay it to the owners and if it is a loss we need to reduce our liability;

Do get back to us in case of any further query!!!


  • 0
What are you looking for?