Question

a liability arises beacuse of 1 cash transactions 2 credit transactions 3 cash as well as credit transation 4 none of these

Answer 1

Answer:

2 credit transaction

Explanation:. the  liability arises due to  credit transaction because it increases our burden towards another party or increase

Answer 2

Answer:

The correct answer is option (2)Credit Transactions

Explanation:

Credit Transactions-

• A credit transaction is a business transaction that, while having monetary implications, does not involve the exchange of cash at the time the transaction occurs, but is settled in cash at a later date.
• Credit transactions generate assets (receivables) or liabilities (payables) in the books of accounts. At the time of settlement, this asset or liability is removed from the books.
• For example, a manufacturer may sell his goods to a wholesaler who does not pay for them right away but is given a credit period of 30 days to do so.
• This is a credit sale of goods that does not involve an immediate cash exchange, but it results in income recognition and the creation of a debtor, so it still has monetary impact and qualifies as a credit transaction.
• Credit transactions are only recorded in accrual-based books of accounts. These are only recorded in cash-basis books at the time of settlement.

Hence, we can conclude that due to credit transactions, a liability rises.

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