PDSnet Glossary

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Definition

Commitments and potential liabilities and assets which are not reflected on a company's balance sheet. These would be leases which are reflected in the books of account as an expense but because of their contractual nature are in effect liabilities of the business, or derivatives which can potentially expose the company to substantial expenses or letters of credit. Basically, off balance sheet items are attempts by management to avoid disclosing the company's true financial position.

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