Hi, need to submit a 750 words essay on the topic Current Liability/Client Recommendations.ties from long-term liabilities because it enables them to determine immediate obligations that may be payabl

Hi, need to submit a 750 words essay on the topic Current Liability/Client Recommendations.

ties from long-term liabilities because it enables them to determine immediate obligations that may be payable on request and the potential of the business to meet such obligations without risk of bankruptcy.

Sometimes, the business may take cash from clients and workers and records it as short-term liabilities (Walther, 2012). Such events may occur where company collects tax from consumers on behalf of the state whenever they purchase products. Therefore, business will record this amount as a liability since it does not belong to the business, but is temporarily held by the business and submitted to the state during a particular fiscal year. Also, the business collects money from employees for their healthcare and saving schemes, such as social security organizations. The business records this amount as a liability until it remits this amount on behalf of the employees.

Definition of current liability is clear, but items given as an example of current liabilities such as salary payable, taxes and utility payables can just be referred to as accrued expense. The explanation regarding the user of financial statement is precise. The examples regarding the situation in which business collects funds on behalf of the clients and workers are accurate and clear.

The definition of current liability is clear, but some of the examples given, such as interest and principles, are unclear hence requires further elaboration. The reason for differentiating long-term from short-term liabilities by users of financial statement is clear. The explanation regarding collection of cash from client and workers and recording of the same as the current liability is accurate.

Sole proprietorship business is simple to establish and it operates because there is no official process required to start such a business. The owner assumes full power over the business hence no threat of losing business secrets to the rivals. Such business requires a little resource to establish and manage. It is