In business ,'Liability' represents an obligation* to pay in the future and it also represents a promise to perform a service in future.
*Obligation=promise
In accounting, there is a term called 'payables' which is most frequently used to denote liabilities specially short term liabilities.
Let's understand the nature of liabilities with the help of an example:
_ suppose you purchased a raw material worth ₹100000 from a supplier and you promised him to pay the amount after 1 month.
In this situation you owe him ₹ 100000 and this amount is a liability for you.
Here the supplier will issue you a document called 'Bills payable'.
(Bills payable=It's a credit instrument which is received on a credit purchase.)
Like Assets ,as we have discussed earlier , liabilities are also of 2 types:
Now let's understand the accounting nature of liabilities-
*Obligation=promise
In accounting, there is a term called 'payables' which is most frequently used to denote liabilities specially short term liabilities.
Let's understand the nature of liabilities with the help of an example:
_ suppose you purchased a raw material worth ₹100000 from a supplier and you promised him to pay the amount after 1 month.
In this situation you owe him ₹ 100000 and this amount is a liability for you.
Here the supplier will issue you a document called 'Bills payable'.
(Bills payable=It's a credit instrument which is received on a credit purchase.)
Like Assets ,as we have discussed earlier , liabilities are also of 2 types:
Now let's understand the accounting nature of liabilities-
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