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re: The Percentage of Americans With Less Than $1,000 in Savings Is Shocking
Posted on 12/20/19 at 8:56 am to Tchefuncte Tiger
Posted on 12/20/19 at 8:56 am to Tchefuncte Tiger
quote:
You must not be an accountant. Credit is a liability on the balance sheet.
You quoted a large wall of text, none of which mentioned credit being a liability.
Credit is a financial tool which can be used to purchase assets. It is not a liability.
1
Posted on 12/20/19 at 9:14 am to PhiTiger1764
It says it right here:
Once you use your credit to buy an asset, you owe money to an outside party that you must repay, thus you have a liability.
Your car loan is a liability, as is your mortgage, student loan debt, and credit card balances.
Assets = liabilities + owner's equity. The left side of this equations must equal the right side of this equation. This is the foundation of accrual accounting. Yes, credit is a tool, but it is also a liability.
quote:
Liabilities are the money that a company (or individual) owes to outside parties.
Once you use your credit to buy an asset, you owe money to an outside party that you must repay, thus you have a liability.
Your car loan is a liability, as is your mortgage, student loan debt, and credit card balances.
Assets = liabilities + owner's equity. The left side of this equations must equal the right side of this equation. This is the foundation of accrual accounting. Yes, credit is a tool, but it is also a liability.
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