What is a liabilaty?

Answer 1

A liability is a financial obligation or debt that a company or individual owes to another party, which can arise from borrowing money, purchasing goods or services on credit, or other obligations. Liabilities are recorded on the balance sheet and can be classified as current (due within a year) or long-term (due beyond one year). They represent claims against an entity's assets and are essential for understanding its financial health and stability.