Main Liability Accounts

The debts that a company has are known as liability accounts. There are different types and we mention them below.

What are the liability accounts?

1. Providers
2. Documents to pay
3. Various creditors
4. Mortgages or mortgages payable
5. Interest cobrados for anticipantin
6. Rent collected in advance

Main liability accounts

1. Providers

They are the people or business houses to whom we owe for having bought merchandise on credit, without giving them any documentary guarantee.

The Suppliers account increases each time merchandise is purchased on credit; it decreases when the account is paid in full or in part, merchandise is returned to the supplier or we are granted a discount.

Suppliers is the Liability account; because it represents the amount of purchases of. goods made on credit, which the merchant is obliged to pay.

2. Documents to pay

We understand by Documents payable the credit instruments in charge of the business, such as bills of exchange, promissory notes, etc.

The Documents payable account increases when bills of exchange or promissory notes are issued at the expense of the business; decreases each time one of these documents is paid or canceled.

Documents payable is the Liability account; because it represents the amount of the bills and promissory notes that the merchant has the obligation to pay for being in charge of him.

3. Various creditors

They are the people to whom we owe for a concept other than the purchase of merchandise.
The Sundry Creditors account increases each time we become owe for a concept other than the purchase of merchandise; for example, when receiving a cash loan; when buying furniture on credit, etc. It decreases when the account is fully or partially paid or the values ​​that were in our charge are returned to the creditor.
Sundry creditors is the Liability account; because it represents the value of the debts that do not come from the purchase of merchandise, which the merchant has the obligation to settle.

4. Mortgages or Mortgages Payable

They are the obligations that are guaranteed by the real estate deed. Real estate is understood as the land and buildings that are permanent, durable and not rapidly consumable assets.

The account of Mortgage Creditors or Mortgages payable increases each time loans are received whose guarantee is constituted by some real estate; decreases due to payments made on account or liquidation of said mortgage loans.

Mortgage creditors or Mortgages payable is the Liability account; because it represents the amount of the mortgage loans that the merchant has the obligation to pay off.

5. Interest cobrados for anticipantin

They are the interests that are not yet due and that have been collected in advance.

The Interest collected in advance account increases each time interest is collected in advance; It decreases by the proportional part of said interest that has been converted into utility.

Interest collected in advance is the Liability account; because it represents the amount of interest that the merchant has collected in advance, for which he has the obligation to leave with the debtor the amount that has been loaned to him during the time that includes the interests. Naturally, the part of these interests that has been reduced is the one that should be considered a profit.

6. Rent collected in advance

They are the amount of one or more monthly, semi-annual or annual rents, which, not yet being due, have been collected in advance.

The Rents collected in advance account increases each time rents are collected in advance; decreases by the proportional part of said income that has become less as time passes.

Income collected in advance is a Liability account; because it represents the value of the rents that the merchant has collected in advance, and for which he has the obligation, with the lessee, to continue providing the property. Naturally, the part of said income that has decreased is what should be considered a profit.

Follow with 

• Asset accounts