Similarities Between Liabilities And Owner’s Equity

Previously we studied about Difference Between Liabilities And Owner's Equity, but here we study about the similarities between these two Accounting Terms.

1. Liabilities and Owner’s Equity are the debts payable by the business either to outsiders or owners.

2. All the resources (Assets) of the business are the results of Liabilities and Equity. Both Liabilities and Equity Completes the Accounting Equation.

3. Business needs funds from time to time to run properly and both liabilities and equity are the sources of finance for the business to run the business in working condition. For Example, accounts payable are incurred to purchase goods from suppliers and ultimately business sells goods and get return on sales. Such Revenue helps in efficient flowing of the business and provides funds for meeting daily expenses and for effectively carrying out the business. Capital invested in the business or shares issued in case of company to raise funds for future growing of the business.

4. Liabilities and Equity are must in order to provide efficient resources to the business.

So, these are the most important Similarities between Liabilities and Owner’s Equity of the business.