money owed from an outsider is an (a) assets (b) liability (c) expense...
money owed to a outsider is a liablity but money owed from a outsider is a asset
money owed from an outsider is an (a) assets (b) liability (c) expense...
Liability:
Money owed from an outsider is considered a liability in accounting terms.
A liability is defined as an obligation that a company or individual owes to another party and is expected to be settled in the future by transferring economic resources or providing services.
Examples of Liabilities:
Accounts payable
Loans payable
Accrued expenses
Taxes payable
Deferred revenues
Why is Money Owed a Liability?
Money owed by an outsider to a company is a liability because it represents an obligation or debt that the company owes to the outsider.
The outsider who owes the money is considered a creditor or lender, while the company is considered the debtor or borrower.
The company is expected to pay back the money owed, either by transferring economic resources or providing services, within a specified time frame.
Impact on Financial Statements:
When a liability is recorded, it has an impact on a company's financial statements.
It increases the company's total liabilities and decreases its net worth or equity.
Liabilities are reported on the balance sheet, which is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
Liabilities are also used in calculating a company's debt-to-equity ratio, which is a measure of how much debt a company has in relation to its equity.
Conclusion:
Money owed from an outsider is considered a liability because it represents an obligation or debt that a company owes.
Liabilities are reported on a company's balance sheet and have an impact on its financial statements.
Understanding liabilities is important for financial analysis and decision-making.
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