Liability

Meaning: 

Short-term (Current) Liabilities:

Obligations that must be settled within one year.

Long-term Liabilities:

Obligations that are due after one year.

Importance in Finance:

Liabilities are essential for measuring financial health; an excessive amount of liabilities may indicate a higher risk of insolvency.

They assist businesses in managing cash flow, planning budgets, and assessing financial stability.

Role in Goods and Business:

Companies often utilize liabilities, such as bank loans and supplier credit, to acquire inventory, run operations, and produce goods.