Question

Is the p/l appropriationappearing in the balance sheet actually the balance c/d of the p/l appropriation a/c? Why is the profit and loss appropriation on the liability side of balance sheet a loss? But if its just profit and loss a/c profit is on liabilities side and loss on assets side right? Please explain.Thank you!

Answer 1

Owner is separate from business,business treat owner as lended money to business,so profit is like interest we show it in liability side of balances sheet