Liabilities

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New York Times  Jan 10  Comment 
The court has refused to reconsider its 2014 ruling that BP cannot avoid penalties for the 2010 Gulf of Mexico oil spill by blaming another company’s failed equipment.
Insurance Journal  Jan 5  Comment 
As anyone who has grown up around snow knows, part of the fun of sledding is the risk of soaring off a jump or careening around a tree. But faced with the potential bill from sledding injuries, some Iowa cities … The article Some Midwest...
Insurance Journal  Jan 5  Comment 
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Insurance Journal  Jan 2  Comment 
An insurance company has asked a court to limit or eliminate its responsibility to cover some clergy sex abuse claims against the Archdiocese of St. Paul and Minneapolis. Last month, the archdiocese sued about 20 insurers in federal court to...
Insurance Journal  Dec 30  Comment 
The Massachusetts Property Insurance Underwriting Association (MPIUA) — also known as the Massachusetts FAIR Plan — will be expanded to include the writing of dwelling liability coverage, effective Jan. 7, 2015. The expansion is mandated by...
Insurance Journal  Dec 23  Comment 
V3 Insurance Partners LLC  has enhanced its workers’ compensation program, adding National Liability & Fire Insurance Co., a Berkshire Hathaway Group company, as a new market. Now available in additional states with more class codes, V3iConnect...
Forbes  Dec 18  Comment 
By Cindy S. Minniti, Mark S. Goldstein, and Kimberly M. Mitchell
Insurance Journal  Dec 18  Comment 
XL Group’s Professional Liability arm has released a new Executive and Corporate Securities Liability policy form to protect companies and their directors and officers from what it terms “an increasingly complex litigation and regulatory...
Insurance Journal  Dec 17  Comment 
The owners of a multistate chain of nursing homes may have committed fraud by transferring liabilities to a shell company that later lost more than $2 billion in jury verdicts to families who claimed relatives died of neglect, a federal … The...




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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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