Are Liabilities and Expenses the same thing?

Question

Are Liabilities and expenses the same.

So if I asked you what the reatined earnings was...

And assests were 300, Liabilities were 150 and stock was 50 and expenses were 50

You would have retained earnings of 100?

Answer 1

liabilities and expenses are NOT the same. however, expenses sometimes give rise to liabilities.

in your example, retained earnings will be $100.

assets = liabilities + equity

equity can be further broken down into stock and retained earnings. so the expanded accounting equation becomes:

assets = liabilities + stock + retained earnings

so if...

assets = 300
liabilities = 150
stock = 50

then retained earnings has to be 100.

the expenses of 50 is extra information

Answer 2

liabilities are not expenses
expenses are currentand the liabilities are what the company might owe