Liabilities, Obligation
The responsibility of a person, business, or organization to pay or give up something of value.
A liability is a financial obligation of a company that results in the company’s future sacrifices of economic benefits to other entities or businesses. A liability can be an alternative to equity as a source of a company’s financing. Moreover, some liabilities, such as accounts payable or income taxes payable, are essential parts of day-to-day business operations.
Liabilities can help companies organize successful business operations and accelerate value creation. However, poor management of liabilities may result in significant negative consequences, such as a decline in financial performance or, worse, bankruptcy.
In addition, liabilities determine the company’s liquidity and capital structure.
A company reports its liabilities on its balance sheet. According to the accounting equation, the total amount of the liabilities must be equal to the difference between the total amount of the assets and the total amount of the equity.
iabilities must be reported according to the accepted accounting principles. The most common accounting standards are the International Financial Reporting Standards (IFRS). The standards are adopted by many countries around the world. However, many countries also follow their own reporting standards such as the GAAP in the U.S. or the RAP in Russia. Although the recognition and reporting of the liabilities comply with different accounting standards, the main principles are close to the IFRS.
On a balance sheet, liabilities are listed according to the time when the obligation is due.
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https://corporatefinanceinstitute.com/resources/knowledge/finance/liability/
https://meridian.allenpress.com/accounting-horizons/article-abstract/24/4/623/68371/What-Are-the-Essential-Features-of-a-Liability?redirectedFrom=fulltext