Liabilities
* Definition: Liabilities are obligations that a business owes to external
parties. These represent future sacrifices of economic benefits (e.g., cash or
services) arising from past transactions or events.
* Examples:
* Loans and borrowings
* Accounts payable (money owed to suppliers)
* Wages payable
* Taxes payable
* Types:
* Current Liabilities: Due within one year (e.g., short-term loans,
unpaid bills).
* Non-Current Liabilities: Due beyond one year (e.g., long-term loans,
bonds payable).
* Balance Sheet Impact: Liabilities appear on the balance sheet as a key
component that shows the financial obligations of the business.
________________________________
Expenses
* Definition: Expenses represent the costs incurred by a business in its
normal operations to generate revenue. They reduce net income and equity.
* Examples:
* Rent and utilities
* Salaries and wages
* Advertising costs
* Depreciation
* Income Statement Impact: Expenses appear on the income statement,
directly reducing a company's net profit or loss.
Please also note it is about the time of the action. If you are going to be
late for Rent and want to register it in your books, then it will be a
liability till you pay the same.
Saludos Cordiales
Murugan
________________________________
From: gnucash-user
<gnucash-user-bounces+m.muruganandam=hotmail....@gnucash.org> on behalf of
Griffin <grif...@bernevyl.com>
Sent: 21 November 2024 16:08
To: gnucash-user@gnucash.org <gnucash-user@gnucash.org>
Subject: [GNC] Liabilities vs Expenses.
I'm no accountant, so I'm wondering what the difference is between
liabilities and expenses, and the importance of that difference.
I currently have GnuCash set up so that everything I spend is an
expense. Would it be "better" to have the recurring bills as
liabilities, i.e. rent, utilities, etc. If that is the case, would I
place a debt onto the liability at the statement date, and then payment
when I make a payment.
Does it really make any difference to anything?
Thanks
Griffin
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