Future Commitments query

Question from a non-accountant.

When might values appear in “Future Commitments” on the Balance Sheet and how do they differ from Liabilities ?

The reason I’m asking is that I was wondering whether this would help me identify something where I know I will have a financial obligation but for which I’ve not yet placed an order.

My specific example: we have a community cinema. People buy tickets for a film that we will show in 2 month’s time. In order for that film show to go ahead I will have to purchase a film license - however, I never order that license until a couple of weeks before the show, and the payment is not made until after the show has completed I’ve therefore got cash in my bank account which gives a false impression of our overall liabilities.

Through my non-accountant eyes that would be a future commitment - but is that technically correct ? And if so, how do values appear on the Future Commitment line in the balance sheet ?

Thanks, and apologies if this is a dumb question.

Your accountant is correct. Future commitments are usually disclosed as notes to the financial statements and do not require an accounting entry until the transaction is completed.

You could put this way - Future Commitments are potential liabilities whereas actual commitments are real Liabilities.

There is a difference between cash in the bank and cash position, cash in the bank minus liabilities = cash position - besides your overall liabilities is illustrated on the balance sheet so how can that be a false impression.