Liabilities are often referred to as "outsider claims" and owners' equity as "insider claims" to assets.

Question

Quizplus · Accepted Answer

Liabilities are considered outsider claims because they represent the obligations of the business to parties other than the owners, such as creditors and lenders. On the other hand, owners' equity is considered insider claims because it represents the owners' ownership interest in the assets of the business.

Liabilities Are Often Referred to as "Outsider Claims" and Owners