Question

Which among the following would be classified as a part of Internal Liability?

A Loan taken by an employee Correct Answer Incorrect Answer
B Profits earned by the company not yet distributed Correct Answer Incorrect Answer
C Loan taken from the bank Correct Answer Incorrect Answer
D Assets bought from capital employed Correct Answer Incorrect Answer

Solution

All obligations which a business has to pay back to internal parties such as promoters (owners), employees etc. are termed as internal liabilities. Example – Capital, Salaries, Accumulated profits, etc Profits earned by the company not yet distributed would be the part of internal liability

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