![]() ![]() Say, if an entity has to pay creditors by purchasing raw material in 1-month time, that liability will be categorized under current liabilities. 1) Current LiabilitiesĬurrent liabilities are liabilities payable within 12 months from the time of receipt of economic benefit. Types of Financial Liabilities:įinancial liabilities are classified into two broad types based on the time period within which they become payable. They may invest in fixed assets and working capital to create a robust platform for their business. Owners undertake these liabilities to fund their businesses. Definition and meaningįinancial liabilities are those liabilities in which a company or an individual has a contractual obligation to pay cash or deliver the financial asset.įor example, bank loans, finance lease liabilities, trade, and other payables, and other interest-bearing financial liabilities.įinancial liabilities are useful for all organizations. This article looks at the meaning and types of financial liabilities. Liabilities can be divided into two types: Financial liabilities and Non-Financial liabilities. ![]() International Financial Reporting Standards (IFRS) Framework defines liability: “ A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.“ Generally, liability is anything that a company or an individual owes to another company or individual. ![]()
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