Liabilities
From Financial Literacy Wiki
(Redirected from Liability)
A liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.
Liabilities have three essential characteristics:
- They embody a duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services or other yielding of economic benefits, at a specified or determinable date, on occurrence of a specified event, or on demand;
- The duty or responsibility obligates the entity leaving it little or no discretion to avoid it; and,
- The transaction or event obligating the entity has already occurred.
