Liability

A liability is money the business owes to others, either individuals or other businesses or organizations.

A business will have assets.

These are things the business owns—or money owed to the business.

A business will also have liabilities.

This is money owed to others.

For example, the loan account shows money owed to a lender.

The suppliers accounts show money owed to suppliers.

Money owed for tax is also a liability.

So, too, are accrued expenses, or likely expenses that are yet to be invoiced.

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