What will be the effect of profit in balance sheet?
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Answer:
As a result, the owner's equity (the owner's capital account) increases. Accountants do prepare an income statement or P&L to report the revenues and expenses, but the ultimate effect of a positive amount of profit or net income is to increase the business's assets and owner's equity.
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Explanation:
Balance Sheet Effect
A profitable company will show an increase in assets corresponding to the increase in retained earnings. This may appear as increased cash, accounts receivable or inventory.
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