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To be liable is to be legally responsible to someone or something. You, or your company, would be legally responsible if something where to happen under your authority. It is very important for a business to know what their liabilities are and to ensure that nothing will happen to either their employees, merchandise, or others involved in the business, aka customers.
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The difference between assets and liabilities is?
assets are what the business owned and liabilities are what the business owe.
Do Debts owed by a business are referred to as?
Liabilities Liabilities
Why are contingent liabilities important in deciding a business loan request?
contingent liabilities may be converted into liabilities upon certain non performances by the customers of the business whose loan proposal is under consideration. conversion depends upon the nature of contingent liabilities i.e. nature of transaction on the back of contingent liability is important. Person analyzing the loan proposal should calculate the degree of risk associated with them.
Is owners equity equal to the business liabilities less the business assets?
No. Owners Equity is equal to Business Assets less Business Liabilities.
What is the difference between net worth and total liabilities?
Net worth is the liability of the business entity to the owner whereas total liabilities is the total of all liabilities of the business entity. ( however normally when we speak of total liabilities of the business we may/can exclude the liability of the business to the owner)
Why are the assets of a business equal to the capital plus liabilities?
Basic accounting equation = assets = liabilities + capitalit is so because capital as well as other liabilities have to be paid by the business at the dissolution time of business and at dissolution time or liquidation time business must have assets equal to liabilities plus owner's equity to pay all liabilities of business without going insolvent otherwise business will become insolvant and somebody will not get all it's liabilities completely cleared at the time of liquidation of business.
What is current liabilities to total assets ratio?
Current liabilities to total assets ratio is the comparison between total assets in business with current liabilities in business.
Different with limited liabilities and unlimited libilities?
The difference with limited liabilities and unlimited liabilities is in the extent of the liabilities. Limited liabilities will only hold one's shares in the business but unlimited liability will have access even to personal wealth which is different from the business.
Do liabilities arise from normal business practice?
Yes, they do. Liabilities always arise, if say it buys supplies but cannot pay for them, or if someone has an accident because of the business person's negligence. The important issue is whether the business's liabilities become personal liabilites of the person running the business. If a person runs a business in what is called a sole proprietorship or simple partnership, the company's liabilities will become those of the business owners. If the company goes out of business, the owner has to use his/her personal assets to pay them. If the business operates as a corporation, limited liability company or limited partnership, depending on state laws, that business's liabilities will not attach to the persons running the business except in extreme circumstances. If that business fails and goes out of business, the owners are not personally liable.
The debts of a business are considered?
Liabilities
What are business debts called?
Liabilities
What are the business debts called?
liabilities
