Question

Can you explain how in liability Increases and other liability decreases in simple words .(no copy paste) you can explain in your words also
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Answer 1

liability never increases and decreases at the same time in one transaction.

in case of different transactions, liability increases when we borrow money from any other firm i.e the or company become debtor and liability decreases when we return the borrowed money.

now question arises that what do we mean by debtor and creditor??

so debtor is that person who borrow money or the one who takes loan or asks for money while creditor is the person who gives money or the one who lens money or the one who is giver.

here is an example, ram borrowed money from Suresh.

so here ram is debtor as he is asking for money, he is the borrower. here ram liability that is responsibility to pay back the money to Suresh increases and when ram will pay back the money his liability will decreases that is his responsibility to pay back money to Suresh will end

here, Suresh is creditor as he is giving money, he is the giver.

hope it helped you, this is one of the most important topic and bases of accountancy, you will understand as soon as you will start doing the questions.

thank you