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What is the term for a liability that promises a future outflow of resources.

User Basit ZIa
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Final answer:

A liability that promises a future outflow of resources is known as a future liability, crucial in financial management and recorded on a balance sheet.

Step-by-step explanation:

The term for a liability that promises a future outflow of resources is called a future liability. In accounting, when looking at a balance sheet in a T-account format, liabilities are recorded in one column opposite the assets. Future liabilities represent obligations that a company is required to pay in the future, such as loans, bonds, or other types of debt. These are contrasted with short-term liabilities, which are obligations due within one year. An example of a future liability could be a time deposit, also known as a certificate of deposit, where the depositor has committed to leaving money in the bank for a longer period to earn a higher rate of interest. Future liabilities require careful management, especially regarding an asset-liability time mismatch, where liabilities may need to be paid in the short term while assets are realized over a longer period.

User Nashla
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