0
This is a good question, as a lot of people confuse expenses and liabilities.
Expenses and liabilities are not the same thing. A liability is a balance sheet account that represents a probable future sacrifice of economic benefits resulting from an obligation. For example, inventory purchased on credit represents a liability, because in the future you will need to sacrifice cash in order to satisfy a current obligation. Receiving cash in advance for services is also a liability, because in the future you will need to sacrifice labor hours in order to satisfy it. Since it is a balance sheet account, a liability will exist on your books until you have satisfied it.
An expense on the other hand is an income statement account. In accrual-based accounting, you deduct expenses against the revenues you generate in that period in order to arrive at your net income. In general, you try and match up your revenue and expenses as closely as you possibly can.
The main source of confusion is that usually when a company recognizes an expense, it also recognizes a corresponding liability that arose as a result. However, expenses and liabilities are two different things.
Wiki User
∙ 12y ago
Add your answer:
Earn +20 pts
Are Fixture and fittings an expenses or liability?
expenses
Are prepaid expenses an asset liability or equity?
NO! Prepaid expenses are assets!!
What is meant by expenses payable?
Expense payable is a current liability.
Outstanding expenses under which group?
outstanding expences is an current liability
Are accrued expenses a debit or credit balance?
credit because it is a liability.
Are Fixture and fittings an expenses or liability?
expenses
What is Promotion expenses is it an expense or current liability?
it is Administative Expenses And Indirect Expenses
Are prepaid expenses an asset liability or equity?
NO! Prepaid expenses are assets!!
Is supplies expenses a liability?
Yes.
Expenses that have been incurred but not recorded in the accounts?
Expenses incurred but not yet paid or recorded are called accrued expenses.
Is interest expenses an asset or a liability?
In accounting, interest and other expenses are neither; they are a contra-equity account. This means that as expenses increase, the owners have less equity. Expenses should normally be treated as a debit account, so as you record interest expenses, you should be crediting either an asset or a liability at the same time.
What is meant by expenses payable?
Expense payable is a current liability.
Is a sales return and allowances a liability?
Sales returns and allowances is not a liability rather these are expenses or reduction in actual sales
Outstanding expenses under which group?
outstanding expences is an current liability
Are accrued expenses a debit or credit balance?
credit because it is a liability.
Is sales returns and allowance a current liability?
Sales returns and allowances is not a liability rather these are expenses or reduction in actual sales
Formula for current liability?
Current Liability = sundry creditor+bank overdraft+ expenses payable+provision for tax,divident
