why the debit balance of p&l a/c is shown in asset side of balancesheet

debit balance of p&l a/c is shows in asset side of balance sheet. why?

4 Answer(s)


Debit balance of Profit and loss account is called Net profit. It is added to capital account and not on asset side of Balance sheet.


debit balance of profit and loss account is nothing but defficit for that period,so we can show it as fictiticious asset or we can show it as negative balance in liability side


Debit Balance of P/L ac means a loss to the firm! It is something that the firm is not liable to pay to the members of the firm (owners). Hence -ve balance in Liabilities Side which can be shown on Asset Side. P/l dr balance is a fictatious asset.


Debit balance of p&l account is shown in the asset side of balance sheet because it is a fictitious asset... However it is also said that as credit balance of p&l accout is shown in the liability side   debit balance can be shown in the asset side.😐


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