Question

Define a “liability” by listing its essential characteristics.

Answer 1

Liability can be suggested as a form of borrowing, personal income that is payable by the one who has borrowed. So it’s the responsibility to others settled through the transfer of assets, a duty obligated to another without avoiding settlement, and a past transaction that one is liable to pay to one that they have taken it from or is supposed to give as part of the contents. The liability can be described as current, non-current, and contingent.

The current liability is the liability that a business or person has to pay back to the bank or business or person that they are liable to. This is the liability that is to be settled in the present like the user paid for the products so it’s the liability of the business is current to settle the product or service that it got paid for.

Non-Current Liability is the liability of the business which is not-current but has to be given to another one today or tomorrow but is a liability anyway. The example of a bank loan taken by the business is a liability which is to pay back the loan from the investor like a bank which is a non-current liability.

A contingent liability is a liability that is urgent. The accident at the workplace is the liability that is something that has to be dealt with by the business at the contingency speed due to its nature of liability. The characteristics of the situation and opportunities and time aspect of the business to give to its stakeholders are the liability of the business or individual based on time and event.