What are spontaneous liabilities?

Jump to Solution
Category:

What are spontaneous liabilities?

0
0

What are spontaneous liabilities?

Explanation & AnswerSolution by a verified expert

Explanation

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..

Purchase this answer to view it. $5
Login/Sign up for free, load your wallet instantly using PayPal or cards and purchase this solution to view it.

Looking for the solution to this or another homework question?

If you need essay writing assistance or homework solutions, log in or sign up for a free account and ask our writers any homework question.