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Liabilities in Financial Accounting
Liabilities in Financial Accounting
Published: 2014/02/11
Channel: Edspira
Financial Accounting - Long-term Liabilities - Bonds
Financial Accounting - Long-term Liabilities - Bonds
Published: 2013/11/24
Channel: Finance & Accounting Videos by Prof Coram
Financial Accounting - Presentation of Liabilities
Financial Accounting - Presentation of Liabilities
Published: 2012/08/30
Channel: NGWayAhead
Chapter 10 - Liabilities - Part 1a
Chapter 10 - Liabilities - Part 1a
Published: 2012/08/28
Channel: Judith Paquette
Current Liabilities | Intermediate Accounting | CPA Exam FAR | Chp 13 p 1
Current Liabilities | Intermediate Accounting | CPA Exam FAR | Chp 13 p 1
Published: 2015/10/06
Channel: Farhat's Accounting Lectures
Financial Accounting: LT Liabilities, Bonds Payable & Classification of Liabilities on Balance Sheet
Financial Accounting: LT Liabilities, Bonds Payable & Classification of Liabilities on Balance Sheet
Published: 2013/05/30
Channel: Rutgers Accounting Web
Long-term Liabilities in Financial Accounting
Long-term Liabilities in Financial Accounting
Published: 2014/08/29
Channel: Edspira
Accounting for a Financial Liability
Accounting for a Financial Liability
Published: 2014/04/09
Channel: drdavebond
Contingent Liabilities (Financial Accounting)
Contingent Liabilities (Financial Accounting)
Published: 2014/09/01
Channel: Edspira
Accounting Basics 4- Liabilities
Accounting Basics 4- Liabilities
Published: 2008/01/11
Channel: SusanCrosson
Deferred Tax Liabilities in Financial Accounting
Deferred Tax Liabilities in Financial Accounting
Published: 2016/10/02
Channel: Edspira
Financial Accounting   Ch 9 Current Liabilities and LT Debt   Bonds 3
Financial Accounting Ch 9 Current Liabilities and LT Debt Bonds 3
Published: 2016/01/21
Channel: Jim B
How to Amortize a Bond Discount
How to Amortize a Bond Discount
Published: 2014/09/03
Channel: Edspira
Introduction to bonds | Stocks and bonds | Finance & Capital Markets | Khan Academy
Introduction to bonds | Stocks and bonds | Finance & Capital Markets | Khan Academy
Published: 2013/09/29
Channel: Khan Academy
What are liabilities?
What are liabilities?
Published: 2016/04/26
Channel: ArtsMoneyTalk
The Accounting Equation
The Accounting Equation
Published: 2011/09/25
Channel: SuperfastCPA
Financial Accounting Definitions: Asset, Liability, Stockholder
Financial Accounting Definitions: Asset, Liability, Stockholder's Equity, Revenue, & Expense
Published: 2014/04/18
Channel: Richard Adjou
Accounting for Beginners #1 / Debits and Credits / Assets = Liabilities + Equity
Accounting for Beginners #1 / Debits and Credits / Assets = Liabilities + Equity
Published: 2015/08/12
Channel: CPA Strength
Current Liabilities
Current Liabilities
Published: 2014/08/29
Channel: Edspira
Financial Accounting Concepts - Liabilities Tutorial 4 of 10
Financial Accounting Concepts - Liabilities Tutorial 4 of 10
Published: 2012/03/23
Channel: CXOLearningAcademy
Accounting - Warranty Expense and Liability - Severson
Accounting - Warranty Expense and Liability - Severson
Published: 2017/03/26
Channel: Christopher Severson
Current Liabilities | Financial Accounting | CPA Exam FAR | Chp 10 p 1
Current Liabilities | Financial Accounting | CPA Exam FAR | Chp 10 p 1
Published: 2016/10/05
Channel: Farhat's Accounting Lectures
Deferred Tax Asset & Deferred Tax Liability (Basic Understanding, Tax Vs Financial Accounting)
Deferred Tax Asset & Deferred Tax Liability (Basic Understanding, Tax Vs Financial Accounting)
Published: 2013/06/27
Channel: Allen Mursau
Estimated Liabilities | Financial Accounting | CPA Exam FAR | Ch 11 P 3
Estimated Liabilities | Financial Accounting | CPA Exam FAR | Ch 11 P 3
Published: 2015/11/16
Channel: Farhat's Accounting Lectures
Accounting for Warranty Expense
Accounting for Warranty Expense
Published: 2014/09/02
Channel: Edspira
Difference Between Credit and Debit in Financial Accounting | Assets = Liabilities + Equity
Difference Between Credit and Debit in Financial Accounting | Assets = Liabilities + Equity
Published: 2017/05/08
Channel: Knowledge World
How to Account for a Finance Lease (Lessee
How to Account for a Finance Lease (Lessee's Perspective)
Published: 2017/06/19
Channel: Edspira
Current Liabilities | Financial Accounting | CPA Exam FAR | Ch 11 P 1
Current Liabilities | Financial Accounting | CPA Exam FAR | Ch 11 P 1
Published: 2015/11/15
Channel: Farhat's Accounting Lectures
Current Liabilities Accounting (Payroll Deductions, Employee Vs Employer Payables & Expense)
Current Liabilities Accounting (Payroll Deductions, Employee Vs Employer Payables & Expense)
Published: 2013/01/22
Channel: Allen Mursau
Accounting 101 Part 03 Assets Liabilities Equity
Accounting 101 Part 03 Assets Liabilities Equity
Published: 2008/10/01
Channel: enlight09
Estimated Liabilities | Financial Accounting | CPA Exam FAR | Chp 11 p 3
Estimated Liabilities | Financial Accounting | CPA Exam FAR | Chp 11 p 3
Published: 2014/01/24
Channel: Farhat's Accounting Lectures
Chapter 10 Financial Accounting
Chapter 10 Financial Accounting
Published: 2015/11/13
Channel: Kristine Barron
1.4 An Introduction to Financial Accounting: Assets, Liabilities, and Stockholders Equity
1.4 An Introduction to Financial Accounting: Assets, Liabilities, and Stockholders Equity
Published: 2014/12/06
Channel: Azar Mammadov
Bond Liabilities | Financial Accounting | CPA Exam FAR | Chp 10 p 2
Bond Liabilities | Financial Accounting | CPA Exam FAR | Chp 10 p 2
Published: 2016/10/05
Channel: Farhat's Accounting Lectures
Accounting for Current Liabilities and Payroll   Part 1
Accounting for Current Liabilities and Payroll Part 1
Published: 2013/08/12
Channel: SHRAccounting
Deferred Tax Assets in Financial Accounting
Deferred Tax Assets in Financial Accounting
Published: 2016/09/26
Channel: Edspira
Current Liabilities: Known Amounts? - Financial Accounting video
Current Liabilities: Known Amounts? - Financial Accounting video
Published: 2012/06/18
Channel: Brian Routh TheAccountingDr
Long-Term Liabilities -1 Types
Long-Term Liabilities -1 Types
Published: 2007/09/20
Channel: SusanCrosson
Long Term Liabilities Payable | Financial Accounting | CPA Exam FAR | Ch 12 P 1
Long Term Liabilities Payable | Financial Accounting | CPA Exam FAR | Ch 12 P 1
Published: 2015/11/23
Channel: Farhat's Accounting Lectures
Liabilities (Finance, Accounting) - What is the DEFINITION - Financial Dictionary
Liabilities (Finance, Accounting) - What is the DEFINITION - Financial Dictionary
Published: 2012/08/09
Channel: Subjectmoney
An Introduction to Financial Accounting - 8.2.1- Deferred Tax Liabilities
An Introduction to Financial Accounting - 8.2.1- Deferred Tax Liabilities
Published: 2016/01/23
Channel: Azar Mammadov
Assets, Liabilities, and Stockholders
Assets, Liabilities, and Stockholders ' Equity
Published: 2014/08/24
Channel: Elena Adamova
Current Liabilities and Contingencies
Current Liabilities and Contingencies
Published: 2016/01/13
Channel: SusanCrosson
Accounting for Premiums and Coupons
Accounting for Premiums and Coupons
Published: 2014/09/02
Channel: Edspira
IAS 37 Provisions, Contingent Liabilities and Contingent Assets - summary
IAS 37 Provisions, Contingent Liabilities and Contingent Assets - summary
Published: 2015/05/02
Channel: Silvia M. (of IFRSbox)
Current Liabilities | Financial Accounting | CPA Exam FAR | Chp 11 p 1
Current Liabilities | Financial Accounting | CPA Exam FAR | Chp 11 p 1
Published: 2014/01/17
Channel: Farhat's Accounting Lectures
Contingent Liabilities | Financial Accounting | CPA Exam FAR | Ch 11 P 4
Contingent Liabilities | Financial Accounting | CPA Exam FAR | Ch 11 P 4
Published: 2015/11/16
Channel: Farhat's Accounting Lectures
Chapter 11   Current Liabilities and Payroll
Chapter 11 Current Liabilities and Payroll
Published: 2017/06/19
Channel: Vicki Stewart
01. Basic Accounting: Elements of Accounting - Assets, Liability & Owners
01. Basic Accounting: Elements of Accounting - Assets, Liability & Owners' Equity
Published: 2017/10/28
Channel: 10MS University Courses
IAS 39 Financial Instruments: Recognition and Measurement
IAS 39 Financial Instruments: Recognition and Measurement
Published: 2012/02/10
Channel: Silvia M. (of IFRSbox)
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WIKIPEDIA ARTICLE

From Wikipedia, the free encyclopedia
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In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events,[1] the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.

A liability is defined by the following characteristics:

  • Any type of borrowing from persons or banks for improving a business or personal income that is payable during short or long time;
  • A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit, at a specified or determinable date, on occurrence of a specified event, or on demand;
  • A duty or responsibility that obligates the entity to another, leaving it little or no discretion to avoid settlement; and,
  • A transaction or event obligating the entity that has already occurred

Liabilities in financial accounting need not be legally enforceable; but can be based on equitable obligations or constructive obligations. An equitable obligation is a duty based on ethical or moral considerations. A constructive obligation is an obligation that is implied by a set of circumstances in a particular situation, as opposed to a contractually based obligation.

The accounting equation relates assets, liabilities, and owner's equity:

The accounting equation is the mathematical structure of the balance sheet.

Probably the most accepted accounting definition of liability is the one used by the International Accounting Standards Board (IASB). The following is a quotation from IFRS Framework:

A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits

— F.49(b)

Regulations as to the recognition of liabilities are different all over the world, but are roughly similar to those of the IASB.

Examples of types of liabilities include: money owing on a loan, money owing on a mortgage, or an IOU.

Liabilites of sectors of USA economy, 1945-2009, based on flow of funds statistics of the Federal Reserve System.

Liabilities are debts and obligations of the business they represent as creditor's claim on business assets.

Classification[edit]

Liabilities are reported on a balance sheet and are usually divided into two categories:

Liabilities of uncertain value or timing are called provisions.

Example[edit]

When a company deposits cash with a bank, the bank records a liability on its balance sheet, representing the obligation to repay the depositor, usually on demand. Simultaneously, in accordance with the double-entry principle, the bank records the cash, itself, as an asset. The company, on the other hand, upon depositing the cash with the bank, records a decrease in its cash and a corresponding increase in its bank deposits (an asset).

Debits and Credits[edit]

A debit either increases an asset or decreases a liability; a credit either decreases an asset or increases a liability. According to the principle of double-entry, every financial transaction corresponds to both a debit and a credit.

Example[edit]

When cash is deposited in a bank, the bank is said to "debit" its cash account, on the asset side, and "credit" its deposits account, on the liabilities side. In this case, the bank is debiting an asset and crediting a liability, which means that both increase.

When cash is withdrawn from a bank, the opposite happens: the bank "credits" its cash account and "debits" its deposits account. In this case, the bank is crediting an asset and debiting a liability, which means that both decrease.

See also[edit]

References[edit]

  1. ^ "Definition and Recognition of the Elements of Financial Statements" (PDF). Australian Accounting Standards Board. Retrieved 31 March 2015. 

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