What is Liability?
Liabilities are obligation or we can say is the claim of outsiders on business.
Lets understand this by example: In a business if you require money that you are borrowing from some financial institute like Bank. This money that was borrowed by bank will increase the asset of business as cash but on the other side it will give right to Bank for claiming the same from business till business returns this money to bank. So, this will be a claim of Bank (outsider) and a Liabilities for business that need to be paid back.
Some example of Liabilities are: Bank Loan, Creditor, Outstanding expenses, Bills Payable etc.
Liabilities are two types:
Short term Liabilities – Also called current Liabilities, that ends in a particular financial year.
Long term Liabilities– Such a Liabilities exists for more than a financial year.
Youtube Link: https://youtu.be/KGrw1EYWnO0
