Filter by Categories
Accounting
Banking

Accounting




Non-Financial Liability


A liability for which an entity (carrying it on its balance sheet) is not under obligation to settle it using financial resources (particularly monetary assets). It may also refer to all types of obligations that are not financial in nature (i.e., do not have a direct or stated monetary value) but still require the use of economic resources in the future for its settlement.

Non-financial liabilities may also denote liabilities that do not arise from financial transactions. Examples of such liabilities include liabilities to employees, tax liabilities, social security payables, employers’ liability insurance premiums, etc. Liabilities towards employees consists of liabilities arising from accrued leave and outstanding bonus payments, etc.

Non-financial liabilities are typically characterized by their very nature as reflecting an obligation to deliver goods or services, rather than an obligation to deliver cash or other types of financial assets. For example, warranty obligations require the obligor- entity to provide a service to repair or restore an asset  covered by the warranty obligation.

Contrary to financial liabilities, non-financial liabilities typically do not have a corresponding and offsetting asset recognized by the counterparty.

Non-financial liabilities may also be known as operating liabilities.



ABC
Accounting is the language of business, everywhere, worldwide. It is the means by which virtually every business communicates information about its operations, irrespective of size, scale, objectives, ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*