2006-12-14 02:17:45 · 2 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
It isn't.
There are three parts to the balance sheet -- Assets, Liability andd Shareholder Equity. There is also the following accounting identity:
A = L + SE
Think of it this way -- assets represents the complete value of the firm. Liabilities represents the value of what you owe. SE represents the value to shareholders. Earnings get added to Shareholder's Equity -- not to Liabilities.
2006-12-14 02:25:23 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
The company is a different legal entity from the shareholders.The profit earned belongs,(has to be given back sometime or the other in future) to the shareholders.Therefore,it is a liability of the company to its shareholders.
2006-12-14 12:23:42 · answer #2 · answered by indchip 2 · 0⤊ 0⤋