Merriam-Webster website defines debt one way as "an amount of money that you owe to a person, bank, company, etc."

Does this mean that a debt is created when a bill (e.g. utility or internet service bill) is issued to me?

If issuance of a bill does not imply creation of debt, what are the practical differences between the balance noted in a bill and debt?


From accounting perspective, an unpaid bill for internet services, according to the Accruals Concept, is recorded as a liability under 'Current Liabilities' section of the Balance Sheet. Also as an expense on the Income Statement.

So to answer your question it is both: a debt and an expense, however this is only the case at the end of the period. If you manage to pay it before the financial period ends this is simply an expense that is financed by cash or other liquid Asset on the Balance Sheet such as prepayment for example.

For private persons you are generally given some time to pay the bill so it is technically a debt (Internet Provider would list you as a debtor on their accounts), but this is not something to worry about unless you are not considering to pay this bill. In which case your account may be sold as part of a factoring and you will then have a debt affecting your credit rating.

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A debt is created when the service is rendered or the goods are sold to you. The bill is simply a way of recording the debt and alerting you to it.

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