Monetary liability definition

What is a Monetary Liability?

A monetary liability is a fixed obligation to pay. The amount of this obligation does not depend on the outcome of future events. The amount to be paid is typically stated in a contract, invoice, or employment agreement.

Examples of Monetary Liability

Examples of monetary liabilities are as follows:

  • Trade payables. These are amounts billed to a company by its suppliers for goods delivered to or services consumed by the company in the ordinary course of business.

  • Notes payable. This is a written promissory note. Under this agreement, a borrower obtains a specific amount of money from a lender and promises to pay it back with interest over a predetermined time period.

  • Wages payable. This is hourly compensation earned by employees but not yet paid.

In every case, the amount of the obligation to be paid is clearly stated in, respectively, a supplier invoice, a loan agreement, and a payroll record.

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Financial Liability