On 2/18/2025 1:56 AM, John Walker via gnucash-user wrote:
In standard bookkeeping, a liability is anything that a business owes
for more than the accounting period which is usually 12 months. A
mortgage is a good example. An expense is something that is paid out
within the accounting period. The electricity bill is a good example.
Cheers
John
It is NOT as simple as that. And this is especially true when accounting
for a business << more lee way in personal accounting >> There are RULES
set by the jurisdictions to which a business needs to report.
Organizations are going to fall in between (they may have more freedom
to CHOOSE what rules they will follow, but will have to adhere to their
choices.)
If accounting for a business, be it sole proprietorship, partnership, or
incorporated entity, you will need to learn the rules and/or get
professional help. Please not that in general the rules will depend not
only on the form of the entity but possibly also on line of business
(are you a farm? a publisher of books? a whatever?
Michael D Novack
PS: To give a concrete example, if a corporation with stock/shareholders
a dividend becomes a liability when declared by the Board of Directors
even though it might be payable after a only a short time (within the
same accounting period). Like I said, you either need to learn or have
professional advice. I am NOT qualified to give such advice, so won't,
except in the case of small organizations.
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