oh, lol, duelling blade away.
the naive understanding of what liabilities (on a balance sheet, in an accounting sense) mean is that it’s a list of “what you owe”. this has some superficial plausibility and in many cases it is literally correct, but it is false as a definition.
the correct understanding is that it lists your sources of funding so as to match them with how they have been allocated (“balance”).
the confusion comes from (I think?): i) that many sources of funding are counterfactual - accounts payable, for example, is your supplier extending you credit, meaning you have a funding need that could have been met with financing, but was actually met in a more intangible manner, and ii) that funding almost always implies a return, hence when you take funding you owe something in return.
nonetheless, there are many examples that show the equivalence (liabilities=what you owe) to be demonstrably silly, which was what my hell thread on the bird app was going to be about. rather than spell them out here, if you are curious, I encourage you to ponder the cases of accrued interest, goodwill impairments, and negative equity.
thank you for coming to my TED talk.
