Liabilities

RECENT NEWS
Insurance Journal  Aug 3  Comment 
National wholesale insurance broker, Founders Professional, has opened a new managing general agency, Founders Specialty, which will focus on developing products primarily in the professional liability space with key insurance partners. Founders...
Insurance Journal  Aug 1  Comment 
Philadelphia Insurance Companies’ (PHLY) has launched a new Cyber Security Liability Endorsement that offers both first and third party protection for numerous classes of business. The Cyber Security Liability Endorsement can be added to most...
Insurance Journal  Jul 29  Comment 
The Wisconsin Supreme Court has put to a rest a case in which an insured alleged breach of faith when the insurance company that wrote his professional liability errors and omissions insurance policy denied coverage due to a policy exclusion....
Insurance Journal  Jul 28  Comment 
Telematics data was successfully used to defend a driver in a liability trial in England, according to Insure The Box Ltd., a telematics-based car insurer. The strength of the telematics data prove the policyholder’s case, in contrast to the...
Insurance Journal  Jul 28  Comment 
Berkshire Hathaway Specialty Insurance Co. (BHSI) announced that it has introduced cyber liability insurance in New Zealand and appointed Ian Marshall to lead the product line locally as senior underwriter, Executive & Professional Lines. BHSI’s...
Insurance Journal  Jul 27  Comment 
Allianz Group is launching a new transactional liability unit designed to take advantage of greater M&A deal activity in the U.S. and, ultimately, around the world. The insurer’s Allianz Global Corporate & Specialty division will handle the...
Insurance Journal  Jul 26  Comment 
Pen Underwriting announced that Adrian Scott has been appointed to the newly created role of head of Cyber Liability. Scott takes responsibility for enhancing Pen Underwriting’s capabilities in cyber risk management and insurance, building a...
Insurance Journal  Jul 25  Comment 
General Star Management Co. has added 50 classes for products liability offered by the Delegated Division, Contract P&C Unit. In addition, the gross receipts threshold for eligibility has been increased from $1.5 million to up to $5 million...
Financial Times  Jul 24  Comment 
Inquiry lambasts collapsed store’s former owner, buyer and ‘directors, advisers and hangers-on’
Insurance Journal  Jul 22  Comment 
Law firms have seen an increase in the frequency of malpractice claims, which are becoming more costly to defend and could cause lasting reputational damage, according to a new study by insurance broker Ames & Gough. The study found that …




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A liability is an accounting term for anything of value a company or an individual owes. Liabilities can include financial liabilities usually debt or fixed goods which have yet to be delivered. Publicly-traded companies are required to list a summary of their assets and liabilities every quarter on their balance sheet, where accounting rules determine how liabilities are categorized and valued. The opposite of a liability is an asset - something of positive value, or something the company owns.

Types of Liabilities

From an accounting perspective, liabilities are divided into two broad categories:

Current Liabilities

Current liabilities are debts or obligations which are due within a year. Current liabilities are reported on the company's balance sheet and include Short-Term Debt, accrued liabilities and Accounts payable.

  • Short-term bank loans: which are a form of short-term debt that the company takes out.
  • Accounts payable: which is money owed to a company, for a good or service. This includes unpaid bills.

By the principle of prudence, current liabilities are reported in the balance sheet at their least favorable valuation.

Long-Term Liabilities

Long-term liabilities are liabilities that will not be paid off or are not due within a year. Long-term liabilities are also reported on the company's balance sheet and include items such as long-term bank loans and bonds issued by the company. They are generally subject to interest payments. Examples include: company cars, computers and investment in another company.

References

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