What are spontaneous liabilities?

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What are spontaneous liabilities?


What are spontaneous liabilities?

Explanation & AnswerSolution by a verified expert


Spontaneous liabilities are the ones which change with every dollar change in sales. These are current liabilities which get accumulated with every passing day and the firm has to pay them shortly, that is, within a year.
Spontaneous Liabilities includes:

Accounts payable - Accounts payable are the short term debts of a company owed to its creditors which increases with increase in credit sales.
Accrued wages - Accrued wages are the wages earned by a worker but not yet paid by the company which increases and gets accumulated with increase in the production.
Taxes - Taxes are the compulsory financial obligations to be paid by a company on its earnings, an increase in sales revenue will increase taxable income and thus, the tax liability of a firm.

Verified Answer

Spontaneous liabilities are the ones that arise from the company's day to day business. These include accounts payable, outstanding expenses, short term loans etc..

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