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becouse the revenue in credit side but profit and revenue appear in income statment
fully accepted with the both answers
The accounting equation and the double entry system provide an explanation why a company's profit appears as a credit on its balance sheet.
Asset accounts usually have debit balances while liabilities and owner's or stockholders' equity usually have credit balances. When a company provides services for cash, its asset Cash is increased by a debit and its owner's equity is increased by a credit. The credit is initially recorded in a revenue account, but revenue accounts are temporary accounts that cause owner's equity to increase.
If the owner withdraws some cash for personal use, the asset Cash will decrease through a credit and the owner's equity will decrease through the debit part of the accounting entry. The debit might initially be recorded in the sole proprietor's Drawing account but this account is also a temporary account that will cause the owner's equity to decrease.
The accounting equation and the double entry system provide an explanation why a company's profit appears as a credit on its balance sheet. ... The debit might initially be recorded in the sole proprietor's Drawing account but this account is also a temporary account that will cause the owner's equity to decrease.
