Accounting For You
Shopping Basket
Your Basket is Empty
Quantity:
Subtotal
Taxes
Delivery
Total
There was an error with PayPalClick here to try again

Accounting and Bookkeeping for Small Businesses and Sole Traders
Chartered Management Accountant, Certified Practising Accountant
and Registered Tax Agent
My Blog
Blog
Understanding Your Balance Sheet - 2. Make Up - Liabilities
Posted on 7 September, 2014 at 21:58 |
This is the
2 in a series of posts that have the aim of helping you, the business
owner, to better understand your Balance Sheet so that you can use it to work
for your business.
Make Up We are
currently looking at the different categories of accounts that make up the
Balance Sheet. The last post explained the Assets category of accounts and
looked at the different types of Assets that can be found on a Balance Sheet.
In this post we will be looking at the next category of accounts that can be
found on a Balance Sheet – Liabilities. Liabilities
Liabilities
are accounts that effectively reduce the value of a business. When a Balance
Sheet is being looked at to determine the value of a business the Liabilities
are deducted from the Assets in order to determine the value. Liability
accounts represent monies that are owed by the business both short and long
term. There are two categories of Liabilities represented on a Balance Sheet:
We will
look at each of these categories in turn.
Current Liabilities
Current
liability accounts, as with Current Asset accounts, can change value on a daily
basis. They represent money that is owed by the company and will obviously
change in value as new costs come in or as monies are paid. There are three
principal types of Liabilities:
Longer Term Liabilities > 1 Year The most
common types of longer term liabilities are bank loans or mortgages since these
can run over several years. As with
Longer Term Assets, there will often be two different accounts to represent a
loan: one for the loan repayments that will be made over the next year; and one
for the loan repayments that will be made in more than one year’s time. Next Week -
Equity |
Categories: Balance Sheet
Post a Comment
Oops!
The words you entered did not match the given text. Please try again.
0 Comments
Loading...
/
Oops!
Oops, you forgot something.