What is laliability?

Answer 1

Liability refers to the legal responsibility of an individual or organization to settle debts or obligations, which can arise from contracts, torts, or statutory requirements. It encompasses financial obligations, such as loans or damages awarded in lawsuits, and can also include potential future obligations. In accounting, liabilities are recorded on the balance sheet and are classified as current or long-term based on their due dates. Understanding liabilities is crucial for assessing financial health and risk management.