3 How does a double-entry book-keeping system normally show the extent of an entity’s liabilities?

This is the story of an Australian company that allegedly broke the law on an almost unimaginable scale. Among the many points covered in the story was ‘an inability to estimate its liabilities’. According to Mr Wayn Martin, the senior counsel for the Royal Commission, the simplistic answer as to why HIH collapsed was a ‘recurrent failure to adequately (sic) estimate the claims liabilities from the underwriting risks taken’.