1) Liability

The amount which a firm owes to outsiders is known as liabilities. These are the debts that the company owes to creditors, suppliers, banks and other financial institutions. Liabilities can be short-term, such as accounts payable or long-term, such as bonds.



The persons to whom the money is owed by the firm are termed as creditors. These are the individuals or organizations that have provided goods or services to the company on credit and are yet to receive payment. Creditors can include suppliers, banks, employees, and other entities.



Revenue refers to the income of a company. It is the amount of money earned by a company from the sale of goods or services. Revenue is a crucial aspect of a company's financial performance as it determines the company's ability to generate profits and grow.

Revenue can be generated through various sources, such as the sale of products or services, rental income, interest income, and royalties. It is important to note that revenue is not the same as profit. Profit is the amount of money left over after all expenses are paid, whereas revenue is the total amount of money earned.

In accounting, revenue is recognized when the goods or services are delivered to the customer and the payment is expected. It is recorded as an increase in assets and equity in the company's financial statements. Revenue is also used to calculate important financial ratios such as the gross profit margin, net profit margin, and return on investment (ROI).