Creditor for expense.

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The discussion clarifies the distinction between creditors for purchases and creditors for expenses. Creditors for purchases relate to goods or services intended for resale or direct production. Creditors for expenses cover other essential business costs like wages and overheads. Outstanding expenses are essentially the same as creditors for expenses, representing amounts owed for services rendered.

Chaitanyaa

Chaitanyaa (Querist)
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16 October 2021 What is the difference between creditor for purchase and creditor for expenses in balance sheet.?
Thank you

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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16 October 2021 Same as the difference between Purchase & Expense.
Purchases usually refers in business to goods or possibly services that are to be sold on or used directly in production of the business outputs
Whereas expenses refers to other business costs such as wages, overheads, administration and financial costs, that are necessary but not directly related to the output.
Thus supplier of these goods or services related to purchase are purchase creditors. While supplier of services related to expenses are creditors of expenses.

Chaitanyaa

Chaitanyaa (Querist)
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16 October 2021 Thanx Sir. It means can we say that Outstanding expenses are same as creditor for expenses?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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16 October 2021 Yes, it can be taken as accrued expenses payable to the creditors.

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