Financial Terms / liability

What are Liabilities?

Liability is a quality or state of being responsible for something, usually used in the plural form!


Liabilities = Assets - Equity

How do I calculate the liability?

It is important to understand how to calculate liability in order to effectively manage a business's financial obligations. The formula for calculating liability is Liabilities = Assets - Equity. To calculate the current liabilities of an enterprise, subtract the current assets from the total liabilities of the business. It is important to keep track of all payments in order to maintain accurate records. Using a spreadsheet program such as Sourcetable can be a useful tool in helping to keep track of payments and ensure that all liabilities are accounted for.

What is a liability?

A liability is something a person or company owes, usually a sum of money.

What is the difference between a liability and an asset?

Assets are things that you own or are owed to you, while liabilities are things that you owe.

Why are liabilities important?

Liabilities are vital because they finance operations.

What does liability refer to?

Liability can refer to legal or regulatory risk or obligation.

Key Points

How do I calculate liability?
Liabilities = Assets - Equity
A Liability is Something That a Person or Company Owes
A liability is an obligation that a person or company is responsible for paying, usually in the form of a sum of money. It is something that they owe to someone else.
Assets are Things That You Own or Are Owed to You
Assets are the opposite of liabilities. They are things that a person or company owns, such as cash, property, investments, or other resources. They can be either physical or intangible, and they may also be owed to a person or company.
Liabilities are Vital Because They Finance Operations
Liabilities are important for businesses to have in order to finance their operations. They enable businesses to make transactions between each other more efficiently, and they also enable businesses to borrow money from lenders or investors.
Liability Can Refer to Legal or Regulatory Risk or Obligation
Liability also refers to the legal or regulatory risk or obligation that a business or individual is responsible for. This could include risk from environmental regulations, financial regulations, or any other legal or regulatory risk that a business or individual is liable for.

Make Better Decisions
With Data

Analyze data, automate reports and create live dashboards
for all your business applications, without code. Get unlimited access free for 14 days.