Liability is the responsibility of the business to pay there all the due either to the owner or a third party. There are four types of liabilities in a business;
- current liabilities
- non-current liabilities
- contingent liabilities
A liability can be done in the past or present by the firm, e.g. fixed asset or current asset of the business. We can settle the liability with the help of cash flow in the business. If a profitable business then easily can pay the liability and if in loss then there is difficult to pay the liability.
(Capital + Liabilities) = Assets | So, Liabilities = Assets – Capital)
Elements of Liabilities
Current liabilities are for a short period of time and this type of liability we have to pay within the year. These are also known as short-term liabilities. Current liabilities are handled by the management and they ensure that the company will make enough revenue from the current assets to guarantee that all the debts are paid on time.
List of current liabilities:
- Accounts payable
- Interest payable
- Income taxes payable
- Bills payable
- Bank account overdrafts
- Accrued expenses
- Short-term loans
Non-current liabilities are for a long time period and we can pay all the debt for a long period of time. This is also known as long-term liabilities. Long-term liabilities are an important aspect of a company, with these liabilities companies’ long-term financing conditions will be managed. Then Companies can borrow long-term debt from the outside to fulfill their capital needs and purchase new capital assets or invest in new capital projects so that they will get more profits. These long-term liabilities help the business to survive, if they are not able to repay the capital then the business will be in a crisis. This helps the business to overcome this crisis and repay them later in a longer period of time.
List of non-current liabilities:
- Bonds payable
- Long-term notes payable
- Deferred tax liabilities
- Mortgage payable
- Capital leases
Contingent Liabilities are those liabilities that depend on the future. Sometimes they occur and sometimes may not. These liabilities depend on the outcome of a future occurrence. In case the occurrence does not happen, an organization is not liable to pay anything. They are required to be disclosed as soon the amount can be estimated and are shown as a footnote to the balance sheet
Examples of contingent liabilities:
- Product warranties
These types of liabilities are the amount owed by the owner as capital, it is also called owner’s equity. Capital, as depicted in the accounting equation, is calculated as Assets – Liabilities of a business.
Elements of criminal liability
The criminal liability came under the law of criminal activities which against a law. Criminal liability refers to suffering penalties or punishment when he or she has done any wrong activities intentionally that is considered against a law and that person is considered as a criminal who needs to suffer.
Criminal liability is charged only when you do a crime intentionally, otherwise, no criminal liability is charged.
Mens Rea is a criminal type that describes how a person is doing a crime, from which intention they do the crime, It is known for deciding the punishment. On this criminal type, the case is long because both parties fight for themselves and if the party on which the criminal liability is charged, he or she has not done any criminal intentionally so he or she will not be liable to pay any kind of liability and no one can accuse him or her to liable the criminal liability.
Intention plays an important role in Mens Rea because if the person does wrong activities intentionally it’s wrong that is against a law. In simple words, if the motive is negative, the punishment is on but if the motive is positive, the punishment is off.
Knowledge is also considered as an important part of criminal liability such as if the person knows that he is doing wrong, still, he is doing the same thing and from that, the opposite person is hurting with his activities, in that case, he is liable to suffer criminal liability.
When you are doing your job, you need to do all activities and in a professional world, you have to take care of your clients by satisfying their needs but if you fail to provide valid services you may be liable to pay criminal liability if the client’s damages. But if the clients do not damage you will not be liable to pay criminal liability.
Suppose, you are an accountant and you have done wrong activities by which your clients have been affected so you have to pay criminal liability but if you have done a wrong activity by which your clients have not been affected so you don’t need to pay criminal liability. It is a strict part of the law.
What is IPC?
IPC refers to the Indian Pinal Code. Criminal CRPC and IPC are different.
The follow-up procedure has been followed on CRPC.
On the other hand, all the cases related to any reason are submitted in IPC so that they can announce a punishment based on given punishments according to crime, all the punishments have been written in the Indian Pinal code. The big crime, the big punishment is announced and the small crime, the small crime is announced.
Concept of Mens Rea under IPC
Mens Rea is a cardinal principle of law that defines intentionally doing activities for affecting the opposite person. The concept of mens rea is difficult in which a person faces difficulties to prove themselves if they have not done any crime intentionally. It contains strong evidence.
Types of Mens Rea
These types of activities are done intentionally or not by mistake.
These types of criminal activities are done by mistake or not intentionally but that person who does crime if he or she is less than 18 years of age so he will not be liable for any punishments.