[Fwd: Re: Liabilities or Expenses???]

[Lincoln A. Baxter]

I should have replied all.

-------- Forwarded Message --------
From: Lincoln A. Baxter <lab at lincolnbaxter.com>
Reply-to: lab at lincolnbaxter.com
To: Daniel R. Bastreghi (D. Bastreghi - Transformando sites em negócios)
<daniel at dbastreghi.com>
Subject: Re: Liabilities or Expenses???
Date: Tue, 01 Dec 2009 20:16:24 -0500

On Tue, 2009-12-01 at 20:44 -0200, Daniel R. Bastreghi (D. Bastreghi -
Transformando sites em negócios) wrote:
>  
> 
> What is the difference between expenses and liabilities? When I use each
> one? It’s not clear to me.

Expense accounts are for things you HAVE paid for.  Food/Groceries for
instance.

Liability accounts for Loans someone has made to you... (They are a
Liablity from your point of view)... (and dare I say it, and "Asset"
from the banks point of view).  The account for the Credit Card
(company) that loaned you money to buy your Food represents your
liabliity.

You settle the Loan (Liability) by paying the CC bill from an Asset
Account (Checking for instance). (by transfering the assets (money) from
your Asset:Checking account to your Liability:CC account when you pay
the bill.

If you bought the Food with a Debit card on your checking account, then
the transfer is directly from the Asset:Checking account to the Expense
account, and there is no liability (or loan) involved.

HTH,

Lincoln


>  
> 
> Thanks a lot.
> 
> Daniel R. Bastreghi
> 
>  
> 
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