How To Find Out Total Liabilities
You can calculate Liabilities from Accounting Equation that shows the relationship between Assets , Liabilities and Owner’s Equity and these types of accounts are shown on the Balance Sheet i.e., these accounts are called Permanent Accounts in Accounting. From the Accounting equation, we get: Total Assets = Total Liabilities + Owner’s Equity By simplifying, we get: Total Liabilities = Total Assets - Owner’s Equity Example: If Total Assets are Rs. 5000000, Owner's Equity is Rs. 300000, then what are Total Liabilities for the accounting period? As, we know: Total Liabilities = Total Assets - Owner’s Equity By putting the values, we have: Total Liabilities = 500000 - 300000 = Rs. 200000 Total Liabilities are also equal to the sum of Current Liabilities and N on Current Liabilities / Long Term Liabilities . Like Total Assets, Total Liabilities are also calculated with the help of accounting ratios like Total Liabilities to Total Asset...