TOPIC NAME:- TYPES OF LIABILITIES

A PROJECT SUBMITTED TO UNIVERSITY OF MUMBAI

FOR PARTIAL COMPLETION OF THE DEGREE BACHELOR IN
COMMERCE ( ACCOUNTING &FINANCE )
UNDER THE FACULTY OF COMMERCE
BY
VANITA VILAS MAGADE
UNDER THE GUIDANCE OF
DR. NILESH E. KOLI
CHANGU KANA THAKUR ARTS COMMERCE AND SCIENCE
SECTOR 11, NEW PANVEL
2019-20
DEFINITION

A liability in general, is an obligation to, or something

that you owe somebody else liabilities are defined as a
company legal financial debt or obligations that arise
during the course of business operations.
CLASSIFICATION OF LIABILITIES

1. Current liabilities
2. Non- current liabilities
3. Contingent liabilities
EXAMPLE OF KEY RATIONS THAT USE CURRENT LIABILITIES

• The current ratio

• The quick ratio
• The cash ratio
 TYPES OF BALANCE SHEET LIABILITIES

• Note payable
• Account payable
• Salaries payable
 MEASUREMENTS OF LIABILITIES

• In conformity with cost principle

• On creation the amount of liability equals market value
• Liabilities valued at historical cost present value and discounted net assets
• Valuation and recognition is necessary for income distribution and capital maintenance
 DEBIT

A debit is an accounting entry that either increases

an assets or expenses account or decrease a liability
or equity account it is positioned to the left in an
accounting entry.
 CREDIT

A credit is an accounting entry that either increases a liability or

Equity account, or decrease an asset or expenses account
It is positioned to the right in an accounting entry.
 WHAT IS LIMITED LIABILITY

Limited liability is a type of legal structure for an organization where a

Corporate loss will not exceed the amount invested in a partnership
Or limited liability company.
HOW LIMITED LIABILITY WORKS

When either an individual or a company functions with limited liability

This means that assets attributed to the associated individual can not be
Seized in an effort to repay debt obligations attributed to the company.
 LIMITED LIABILITY PARTNERSHIPS

1. In a partnership, the limited partners ( LPC) have limited liability while the general partner has
unlimited liability.
2. The limited liability features protects the partner’s personal assets from the risk of being seized to
satisfy credit or claim in the event of the company partnership insolvency while the general partner
personal property would remain at risk
 LIMITED LIABILITY IN INCORPORATED BUSINESS

• In the context of a private company becoming incorporate can provide its owner with company is
treated as a separate and independent legal entity.
• Limited liability is especially desirable when dealing in industries that can be subject to massive losses,
such as insurance.
• A limited liability company ( LLC ) is a corporate structure in the United states where by the Owner are
not personally liable for the company debts or liability.
Thank you