Liability

Meaning: 

Short-term (Current) Liabilities:

These are obligations that are due within one year.

Long-term Liabilities:

These are obligations that are due after one year.

Importance in Finance:

Liabilities are important for measuring financial health; too many liabilities can indicate a higher risk of financial difficulties.

They help businesses manage cash flow, plan budgets, and assess overall stability.

Role in Goods and Business:

Companies frequently use liabilities, such as bank loans and supplier credit, to purchase inventory, operate their businesses, and produce goods.