Expense & Liabilities accounts

[Maf. King]

On Sun 18 March 12 05:08:59 theporter2000 wrote:
> I've just created A/Cs in liabilities what are the difference between
> *Expense & Liabilities* I'm in the UK if that makes a difference although I
> don't think It dose
> 

Hi,

I think that the best way to describe it is: (and I am not an accountant, so 
this is in "plain" english and a simplification)

Basically, expenses is money you have spent, liabilities is money you owe.  
(here can be some cross-over between the two, though.)

eg.
A loan you have taken - the actual funds are a liability, as it is money you 
owe to someone at some point in time

The interest you pay on that loan is an expense - it is the cost of borrowing 
the money.  Repay the loan early, and you save some expense. 

That pint of beer last night in the pub was an expense - but if you are a 
regular, with a really nice landlord, you might be allowed a tab, which would 
be a liability.  

Similarly when you use a credit card to  buy a tank of petrol.  it is an 
expense to you, but also becomes a liability that you owe to the credit card 
company... if you had paid cash, then it would just be an expense.

Hope that makes sense, and doens't contradict itself too much.
Maf.