Where is debt on a balance sheet


All outside capital made available to the company, e.g. supplier credits when buying on target, down payments received or loans taken out.

The term debt is not defined in the HGB, although it is used all the time. For example, according to Section 240 of the German Commercial Code (HGB), every merchant has to state his debts according to type, quantity and value in the inventory. And according to the requirement of completeness in Section 256 (1) HGB, the annual financial statements must contain all debts. Debt is a company's obligations to third parties. Debts are to be differentiated into payment and performance obligations, which as far as they are certain as liabilities, and as far as they are uncertain, as provisions. The division into certain liabilities and uncertain provisions results from Section 253 (1) of the German Commercial Code (HGB). Debt represents the company's outside capital.

Debts is a term used in balance sheet and tax law. In the balance sheet, the businessman has to compare the assets with the debts as the sum of all current and prospective payment obligations. The balance sheet items thus include the liabilities and the provisions, which together form the debt. The excess of the assets over the debts forms the net assets as the balance sheet equity.

Debt is a person's liabilities. It can be either a natural or a legal person, and liabilities means the person's obligations to their creditor or creditors. From the perspective of the creditor (s), the liabilities represent claims or demands.

Grandfather's saying "Only rags have debts" has long since been overtaken by developments. Not only many citizens, the state also lives on credit. As of December 31, 1998, the credit market debts of the public authorities in Germany amounted to more than 2.25 trillion D-Marks. (For comparison: on December 31, 1960 the national debt was "only" just under 57 million DM. The trillion mark was exceeded for the first time in 1990.)

Debt is basically neither “good” nor “bad”. They belong to business both on a large and small scale, i.e. to the state, to a company as well as to a private household. Many dreams and visions would not be feasible if it weren't for the possibility of running into debt, in other words: a loan, a loan. This applies to long-planned vacations as well as to advances in medicine or space travel. Neither the creation of home ownership - socially desired and state-sponsored - nor the establishment of an independent existence are usually possible without a loan. Debts only become problematic in the case of over-indebtedness, i.e. when you are in arrears with your payments (default of payment) or can no longer pay at all (insolvency).

At the end of 1997, 2.6 million households in the Federal Republic of Germany were over-indebted. That means an increase of 30 percent compared to 1994, i.e. within just three years. There are many reasons for over-indebtedness, and both structural and individual reasons come together. The structural causes include high unemployment, the steadily growing cost of living, the low share of freely disposable income from large sections of the population as well as careless lending practices (just think of mail order companies!) Or the day-to-day effects of advertising. Individual causes include, among other things, overestimating one's own financial possibilities, the competition for an appropriate representation of social status, psychological problems, unforeseen events in personal life, addictions and poor education.

The main debts are:

1. Rent and energy debt. Because these debts take precedence over all other debts as being extremely threatening to their existence, they are also called primary debts. Debt in renting an apartment and / or paying for electricity, gas or district heating supplies can result in contract cancellations and thus an extreme loss of quality of life and even homelessness. Primary debt requires an immediate response. If there is no independent initiative, the social end is inevitable.

2. Insurance debts. Experience shows that overindebted people are often overinsured. Anyone who is overinsured should think carefully about which types of insurance they really need and which ones they will probably never use. The latter should be terminated. In the case of premium arrears, insurance companies are often ready to agree to immediate termination even before the notice period has expired. In addition, certain insurances, e.g. life insurance, can be temporarily suspended or the contributions can be deferred. When a life insurance policy is terminated, only the so-called surrender value is reimbursed. This is usually even less than what has been paid in over the years. On the one hand, life insurance can be used for old-age provision. On the other hand, if you terminate the money you have paid out, you may be able to repay other debts.

Bank debt. Debt with banks is usually credit debt. When cash advances, installment loans (installment credit), overdraft facilities or other loans can no longer be repaid, they are called non-performing. Default interest will be charged for default in payment. If the bank cancels a non-performing loan, SCHUFA informs itself about it. A loan canceled due to debts also has a negative effect on creditworthiness.

Mail order debt. It has been proven that the largest group of customers in mail-order companies are low-income earners. Since they make particular use of the option to buy in installments, they quickly run into debt. The claims of large mail-order companies are often assigned to a collection service (debt collection) and are collected by them. A mode of debt settlement can usually be negotiated with reputable debt collection companies. Mail order debts are also sometimes communicated to SCHUFA.

Maintenance debts. Anyone who, as the person liable for maintenance, owes the maintenance to the person entitled to maintenance may be liable to prosecution. Maintenance debts should therefore not be taken lightly. In the Criminal Code it says: "Anyone who evades a legal maintenance obligation so that the life needs of the dependent is endangered or would be endangered without the help of others, is punished with a prison sentence of up to three years or a fine." (§170b StGB) tax debts. In the case of tax debts, the tax office usually accepts payment in installments at a low interest rate.

House or mortgage debt. »Building a house is human nature. Don't pay rent. ”A well-known credit institute uses this slogan to advertise its offers for financing residential property. Many people dream of their own four walls, but this dream can quickly turn into a nightmare. If the repayment installments can no longer be raised from mortgage banks or building societies, there is often a threat of the property being foreclosed.

The most important types of debt have now been presented in a brief overview. In addition, there are other debt risks from credit cards, consumer loans (credit), insufficient reserves for the foreseeable as well as the unforeseen, or through borrowing to settle credit debts.

Credit cards: Paying with "plastic money" is becoming more and more popular. The fatal thing about credit cards is that they give the impression that you can afford anything at any time. Credit cards tempt you to make spontaneous and random purchases. Credit card companies give their customers a credit limit. If this limit is exceeded, both default interest and overdraft fees are charged. These rates are very high. With VISA, for example, they are currently almost 17 percent. Consumer loans: These are loans for the purchase of consumer goods and durable consumer goods. About a third of all German households have taken out such loans, and the average debt per household is 32,000 DM.

Insufficient accumulation of reserves for the foreseeable: Not everything, but a lot can be planned. Expensive dental treatment or an expected back tax payment in the coming year, for example, are predictable financial burdens. Reserves must be built up for these burdens in order to prevent them from giving rise to debts. Insufficient accumulation of reserves for the unforeseen: If you want to avoid debts, you should also take precautions for unforeseen events. Unplanned and unforeseen things happen again and again, and there are invoices in the house that were not expected, for example for repairs or essential purchases. But strokes of fate such as illness, death, job loss and accidents increase the risk of debt if there is insufficient or no reserve formation. Borrowing to settle credit debts: Anyone who cannot pay their credit debts and therefore takes out a new loan or even several to pay off their debts is committing financial suicide. One can hardly get out of this trap of more and more new credits, and the mountain of debt grows until it can no longer be paid off.

According to Section 39 of the German Commercial Code (HGB), the merchant is obliged to sell his property and debts when opening or taking over at the end of each accounting period
to be determined upon dissolution or sale.
This determination is known as an inventory. The physical objects (e.g. goods, money) are determined by counting, measuring or weighing, the incorporeal objects, such as receivables and debts, from the business books (book inventory).
The debts are divided into long-term, such as mortgages and loan debts with a term of at least four years, and short-term, such as liabilities from deliveries of goods and services, advance payments received, bill liabilities, etc., according to the urgency of the repayment. Section 156 (2) AktG 1965 stipulates that debts with their repayment amount, i. H. the amount that must be applied by the company with normal repayment without extraordinary expenses, such as penalties for late payment.


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