Question

Does liability always have a monetary value? Explain your response.

Answer 1

The term liability refers to a claim against the assets/legal obligations of an organization or person, which has arisen out of past or current transactions or actions. It necessitates compulsory transfer of assets or provision of services in the future. In finance terms, if a firm is responsible to pay its lenders, capital contributors, financial institutions, creditors and any short term obligations that it may have incurred, the same are classified as liabilities in the balance sheet.

Monetary value is a currency value resource of a person, business, or the market and it is the price of a commodity. Monetary value represents purchasing power of money. In fact in our modern economy most of the services and goods are priced based on monetary value.
Generally the monetary item is a liability carrying a value (in dollars) and the state of liability refers being responsible for something (money or service). The most common monetary item is simply cash and the monetary items are booked as current assets or liabilities on the balance sheet. So in most of the cases a liability always can contains a monetary value.