Definition Of Liabilities

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Current Liabilities Outstanding expenses Outstanding expenses are the opposite of prepaid expenses.. Even though they are to be paid at some future date, like wages, rent, etc.they are indicated on the firm's balance sheet and firm have liability to pay this outstanding expenses in future when firm have cash in hand. Creditor Definition: ……“Creditor is an accounting expression to indicate a party that has delivered a product, service or loan, and is owed money by one or more debtors”. In simple way we can say creditors are that those which are we purchase product, service or take money in credit base and we can make a promise to creditors to we can pay those money in future. Overdraft When a person or business require money this time…show more content…
In business to getting profits, we need to buy some current assets and fixed assets. .Source and components of working capital Sources of finance for working capital are two ways like long term loan and short terms loan. In working capital or short term source are include bank loans, retained earnings, credit from suppliers, long-term loans from financial institutions, or proceeds from sale of assets. Sources of working capital finance Long-Term Loans Long term loan is the amount of money that is given to an individual or a company on the agreement .In this agreement they agree for pay the borrowed amount in a period that exceeds 12 months. In long term loan interest rate are .pre decided by the both parties and usually secured against certain assets .This type loan are given by different financial institutions .This type of loan taken by business men secure for long-term working capital for the business. Short-Term Loans Short-term loans are to be repaid within a year. Many financial institutions give this type loan like ….Savings banks, cooperatives and the government, private financers are some of the institutions that offer these loans. Bank overdraft is one such source of business finance. Trade Credit Trade credit is the credit given by one business trader to another for the purchase of goods and services. Or in other
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