@Sumit_Agarwal when you take advance from somebody then what happens is that you have to deliver the product or service in future but you have already received the money now. So in accounting terms lets say you sell a product and receive cash in this case you asset reduces ( INVENTORY) and asset increases (CASH) hence your balance sheet is balanced but in case of advance you asset increases (CASH) but asset does not decrease since it is ADVANCE hence to balance the balance sheet you increase the liability. This means I am liable to give them the good or services in future for which I have received cash today.
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