Prepaid Expense

An expense which is paid before its due date is called prepaid expense. For example: Prepaid Insurance, Prepaid rent, 

 A type of plus that arises on a balance sheet as a results of business making payments for goods and services to be received in the close to future. whereas postpaid expenses ar at the start recorded as assets, their worth is expensed over time because the profit is received onto the profit-and-loss statement, as a result of unlike conventional expenses, the business can receive something of import within the close to future.

Outstanding Expenses

The expenses which have been incurred in the business but not yet paid are called outstanding expenses. For example: Account payable, wages payable, 

At the top of the accounting period, there is also expenses that have become due however haven't yet been paid. Expenses nevertheless to be paid or outstanding expenses for this amount ought to be charged against this period’s income. The extent to that the amount belongs to the currents year but due  in the next year is called Outstanding Expenses.

Closing Entries

The entries required at the end of particular accounting period to record internal transactions are called adjusting entries. For example: Depreciation, 

A journal entry made at the end of the accounting amount. The closing entry is used to transfer knowledge in the temporary accounts to the permanent balance sheet or profit-and-loss statement accounts. the aim of the closing entry is to bring the temporary journal account balances to zero for the next accounting period, which aids in keeping the accounts reconciled.

Outstanding Liabilities

Expenses which are payable at the end of period are called outstanding liabilities. For example: Account payable, wages payable, 

The outstanding liabilities are that don't seem to be paid yet. These outstanding liabilities are due on company's balance sheet and we got to pay them.

Contingent Liabilities

Liabilities which come into existence upon happening or not happening of certain event are called contingent liabilities.

Contingent liabilities are liabilities that may be incurred by an entity depending on the outcome of a future event such as a court case. These liabilities are recorded in a company's accounts and shown within the record when both probable and reasonably estimable as 'contingency' or 'worst case' financial outcome. A footnote to the record might describe the nature and extent of the contingent liabilities. The likelihood of loss is delineate as probable, reasonably attainable, or remote. the power to estimate a loss is delineate as celebrated, fairly estimable, or not reasonably estimable.

External Liabilities

Debts which are payable to outsider of business are called external liabilities. For example: Account payable, wages payable, 

The portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international money institutions. These loans, together with interest, must usually be paid in the currency within which the loan was made. in order to earn the needed currency, the borrowing country might sell and export product to the lender's country.

Internal Liabilities

Debts which are payable to owners of business are called Internal liabilities. For example: Capital of business is called internal liabilities.

 The total amount of debts payable by a business to its owners are called internal liabilities e.g., capital.


Example-For a company Internal liability mean that company can pay salary, thus salary is internal liability, and the company can pay interest to bank it's external liability.