BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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assets
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liabilities
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owner’s equity
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accounting equation
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Detailed explanation-1: -Answer and Explanation: The name of the element used to describe creditors’ claims on the assets of a business is liabilities. Liabilities refer to any amount that is owed to outside parties and are divided into short-term or current liabilities and non-current ones.
Detailed explanation-2: -Liabilities represent the obligations of the business. They include the funds obtained from creditors for running the business. So, creditors have a claim on the assets to recover their money.
Detailed explanation-3: -Claims of creditors and owners on the assets of a business are called liabilities. False. Liabilities are only the creditors’ claims on assets. Not owner’s claim.
Detailed explanation-4: -Are Creditors an Asset or Liability? Creditors are a liability because they can be considered as having a negative effect on the company’s net worth. They would be considered an asset if they brought in more money than it cost them to produce and distribute their products.
Detailed explanation-5: -A creditor has a financial claim to the assets of a business. T F 11. An account is a record of only the increases in the balance of a specific item such as cash or equipment.