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Question
Explain Liability.
Answer in Brief
Solution
- A liability is a financial responsibility or debt that an individual, company, or organization owes to another party.
- Liabilities are the result of previous transactions or events and indicate future sacrifices of economic advantages that the company must make in order to settle the debt.
- Liabilities are an important component of a balance sheet because they allow us to analyse a company's financial health and risk.
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Classification of Assets and Liabilities
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