What is a liability?
Liabilities are the current obligations formed by past transactions and events of an enterprise, and the fulfillment of this obligation is expected to lead to the outflow of economic benefits from the enterprise.
The recognition of liabilities first needs to conform to the definition of liabilities. If it cannot lead to the outflow of economic benefits from the enterprise, it cannot be recognized as a liability. At the same time, liabilities can also be measured objectively to meet the quality requirements of relevance and reliability.
Classification of liabilities
Liabilities can be divided into current liabilities and long-term liabilities according to the length of time. Liabilities less than one year (including one year) or more than one year in a business cycle are current liabilities, such as short-term loans, notes payable, accounts payable, advance payment, etc.
Liabilities with a business cycle of more than one year or 1 year are long-term liabilities, such as long-term loans and bonds payable.
The difference between debt and debt
(1) essential difference
Liabilities refer to the current obligations formed by past transactions or events of an enterprise, which are expected to lead to the outflow of economic benefits from the enterprise.
Debt refers to the creditor's provision of funds to the debtor to obtain interest, and the debtor's commitment to repay these funds on an agreed date in the future.
② Subordinate distinction
Debt is subordinate to liability. Generally speaking, in the debt financing of listed companies, the money owed to banks is the main part. The proportion of financing from the bond market is relatively small. The difference between liabilities and liabilities is that the former includes non-loan commercial credit such as accounts receivable and accounts payable, while the latter only includes short-term loans and long-term loans.
③ Different starting points.
Liabilities are bills and other payables that should be paid in the balance sheet and belong to interest-free funds, while liabilities are loans and other funds that need to pay interest and repay debts when due, and liabilities also include some debts.