Liabilities Q1 Answer

Week 9 Liabilities

Q1: What is the definition of a liability?

A: A liability is ‘a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits’.

Martin’s comment: “The definition of a liability is quite a mouthful … until you get a feel for the ‘past’, ‘present’ and ‘future’ aspects of a liability … you can see each of these three aspects in the definition of a liability … ‘past’ events/’present’ obligation and ‘future’ outflow. We need each of these three aspects to be a liability. Otherwise, that aspect of our business is just not a liability.”

I’m really proud of the little moment in ‘Liability’: “I know that it’s exciting / running through the night, but / every perfect summer’s / eating me alive until you’re gone!” That little “every perfect summer’s eating me alive” was really one of the pillars of the record, and I was super stoked with it. It’s got a lot to it for six words.” Read more