Liability: Difference between revisions

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(Removed redirect to Liability)
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{{g}}In general, a legally binding obligation to another person the value of which you should record on the debit side of your ledger. More usually, an undischarged obligation to pay someone an amount of [[money]].
{{def|Liability|/ˌlaɪəˈbɪlɪti/|n|}}
The ''[[value]]'' of one’s legal [[obligation]]. In [[financial services]], generally something which can be articulated as sum of [[money]] payable. Now, I am somewhat making this up as I go along, readers — no change there — but practitioners in financial services have a notoriously loose grip of the English language, so hang it, call it a ''financial poet’s licence''. We monetary bards<ref>I say this in the plural, but I am yet to meet another one; it is a rather singular occupation.</ref> like to wield vocabulary with the deftness of the surgeon. So let’s.
 
In the narrowest sense, a “liability” is a term of accounting art: everything that an “[[asset]]” is not, only rendered in those monochromatic, monetary terms — accountants are colour-blind: they ''only'' understand the world in dollars and cents; they perceive only the decimal code underlying the multi-hued panorama that confronts the rest of us — but this is, in its way, a useful concept to hold onto when drafting a legal contract. It distinguishes a ''liability'' from an ''[[obligation]]'': your ''obligation'' is to provide a carbolic smoke-ball of merchantable quality; your ''liability'' is to pay £100 to a purchaser should it not work.<ref>Huh. I wonder if they would work for [[Covid]].</ref>
 
We are close to the netherworld of jurisprudence by which we ask what ''is'' [[money]]. But let’s save that for another day.
 


A company’s [[shares]], by way of illustration, are ''not'' [[liabilities]], but rather represent an ''ownership'' interest in the issuing company.
A company’s [[shares]], by way of illustration, are ''not'' [[liabilities]], but rather represent an ''ownership'' interest in the issuing company.


{{sa}}
{{sa}}
*[[Obligation]]
*[[Indebtedness]]
*[[Indebtedness]]
*[[Money]]
*[[Money]]
*[[Borrowed money]]
*[[Borrowed money]]
{{ref}}

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