What is meant by liabilities in accounting?
Liability is a term in accounting that is used to describe any kind of financial obligation that a business has to pay at the end of an accounting period to a person or a business. Liabilities are settled by transferring economic benefits such as money, goods or services.
What is liabilities in simple words?
Liability usually means that you are responsible for something, and it can also mean that you owe someone money or services. For example, a homeowner's tax responsibility can be how much he owes the city in property taxes or how much he owes the federal government in income tax.
What is a liability or asset?
Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. In short, assets put money in your pocket, and liabilities take money out!