Liability Ledger

  

Categories: Accounting

You borrow money from a bank. That debt counts as a liability...you have to pay it back. Meanwhile, the bank makes similar loans all day long.

When you borrow $50 from your sister, she can probably keep the debt in her head. Even if you give her $12.50 as partial payment, it isn’t too taxing for her to recall, “that deadbeat still owes me $37.50.”

However, a bank has so many loans outstanding, each with a different terms and in a different state of repayment, it needs a central document to keep them straight.

That list is represented by the liability ledger. It's the main document outlining the loans the bank has outstanding.

Related or Semi-related Video

Finance: What is liability?3 Views

00:00

Finance allah shmoop What is a liability What is it

00:07

it's what you owe you bought four million gumballs on

00:10

credit for your party pack for the parade the money

00:13

is owed to gumballs are us in ninety days that's

00:18

a short term liability Alright next example you borrowed eighty

00:22

three million dollars to set up your new do dental

00:24

drive through service and that money is due in twelve

00:28

years at seven percent interest a year that's A long

00:31

term liability Why long term Because it comes due in

00:35

over a year and that's basically it liability comes in

00:39

two flavors short and long term and it's one of

00:41

the key elements of the balance sheet as it lives

00:43

in this space ride over here So yeah that's a

00:47

liability all this crap time now considering how many gumballs

00:51

you've consumed in the past month you really should get

00:53

yourself to a good drive through dentist or maybe sleep 00:00:56.998 --> [endTime] in mr

Up Next

Finance: What is Accrued Liability?
0 Views

What is Accrued Liability? An accrued liability is a financial obligation yet unpaid, even though it has already been assessed. These are usually t...

Finance: What's the Difference Between Short-term and Long-term Liabilities?
35 Views

What is the difference between short-term and long-term liabilities? Short-term liabilities show up on the balance sheet. They need to be paid in t...

Find other enlightening terms in Shmoop Finance Genius Bar(f)