Basics of a Financial Statement – Part 6 – Liabilities « Health Now, Wealth Forever

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By Gary, on February 1st, 2012

Continuing our series on financial statements, the image below explains liabilities.

A liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. Liabilities feed the expenses box thus reducing cash flow.