Question

State four items of liabilities shown in the balance sheet of a company.

Hint:

A company’s liabilities must be carefully managed to ensure solvency and smooth operations.

Answer 1

The Balance Sheet of a company shows liabilities under two main categories: current liabilities and non-current liabilities. Four common items of liabilities in the balance sheet include:

Short-term Borrowings: These are borrowings that need to be repaid within one year, such as bank loans or trade credit.
Accounts Payable: Amounts owed by the company to suppliers for goods and services purchased on credit.
Long-term Debt: Debt that is due for repayment in more than one year, such as bonds and long-term bank loans.
Provisions for Expenses: Estimated liabilities for expenses that are expected to occur in the future, like employee benefits or warranty obligations.

Conclusion: Liabilities represent the company's obligations, and understanding these items helps evaluate its financial health and capacity to meet short-term and long-term financial commitments.