We’re going to talk about liabilities.
Liabilities are defined again on Wikipedia as an obligation of an entity arising from past transactions or events.
And I think that’s a great definition.
Again to put it in simpler terms, even I would say it’s anything that the company owes.
If the company owes something that’s a liability.
Ah common examples of liabilities are things like bank loans.
You know if your company borrows money from the bank that’s a liability.
And often liabilities feature this word payable. Discover more about SMSF Brisbane.
You’ll see it all the time, bank loan payable, mortgage payable.
If it’s got the word payable you can be assured it’s a liability I quickly glossed over accounts receivable before but again that word receivable, if it’s got the word receivable, you can be sure it’s an asset.
One final type of liability that I haven’t mentioned is accounts payable and these are the short term liabilities like I received a phone bill I haven’t paid it yet.
I have an account payable I owe the phone company some money.
Bank loans, mortgages, are more long-term in nature. It might go over a number of years accounts payable.
It’s like you have 30 days to pay something. That’s an account payable.