Liabilities
debt that company owes to outsiders/external parties
Liabilities are financial obligations or debts that a business or an individual owes to others, which arise from past transactions or events. In other words, liabilities represent the amounts that a business owes to creditors, suppliers, lenders, employees, tax authorities, or any other parties, which need to be repaid in the future.
There are several types of liabilities that a business may have, including:
1. Accounts payable: This is the amount that a business owes to its suppliers for goods or services that have been received but not yet paid for.
2. Accrued expenses: These are expenses that have been incurred but not yet paid, such as salaries, rent, or interest.
3. Notes payable: This is a debt that is issued by a business in the form of promissory notes, which need to be repaid on a specific date with interest.
4. Loans: These are debts that are incurred by a business from banks or other financial institutions that need to be repaid on a specific date with interest.
5. Bonds: These are long-term debts that are issued by businesses in exchange for funds from investors, which need to be repaid with interest over a specific period.
6. Taxes payable: This is the amount of tax that a business owes to the government, such as income tax, sales tax, or payroll tax.
Overall, liabilities represent the financial obligations that a business has, which need to be managed carefully to maintain the financial health of the business.
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