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money owed from an outsider is an (a) assets (b) liability (c) expense (d) capital
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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
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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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