Question

why capital is considered as a liability?? why it is said that business and businessman are two separate entities...plss explain in detail

Answer 1

capital is considered liability because incase ur capital gets over and u become insolvent then u will be entitled to pay the loans taken from ur personal properties hence capital is considered liablity

business and businessman and two separate entities because the business should be kept with a separate identity .suppose the business borrows money the business is supposed to pay it back ,so according to legal procedures the loan is owned by the business.

Answer 2

Liability is of two types - one is internal liability and the other is external liability . Capital is internal liability because it is by internal source that is businessman .