Liabilities

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Atlas General Insurance Services, LLC, a national multi-line program manager, has launched a contractors general liability and exterior insulation finishing systems (EIFS) program. According to Jill Bay-Weber, senior vice president of Atlas’...
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Insurance Journal  Jan 28  Comment 
XL Group has developed a new excess “follow form” insurance policy to provide the option of buying an additional layer of professional liability insurance protection. According to Kelly Lyles, chief executive of XL Group’s Global...
Insurance Journal  Jan 28  Comment 
Texas state Rep. Chris Turner, House District 101- Grand Prairie, has filed a measure that would clarify the definition of “claimant” in respect to a health care liability claim. HB 956 stems from the Texas Supreme Court’s decision in the...
Insurance Journal  Jan 28  Comment 
Tokio Marine Kiln has appointed Paul Woodward as Head of Liability for its Company platform. He has more than 30 years’ experience in the liability insurance market, and will underwrite Employers, Product and Public Liability risks for clients...
Insurance Journal  Jan 27  Comment 
A central Indiana city is taking steps to reduce its liability from a popular winter activity. Muncie’s parks department has placed bales of straw around trees at the bottom of a popular sledding hill in McCulloch Park. The department also...
Insurance Journal  Jan 23  Comment 
Lockton Affinity, the affinity program management division of Lockton Cos., has selected Monitor Liability Managers (Monitor), a W. R. Berkley Company, for its national certified public accountant (CPA) professional liability program. The Lockton...
Insurance Journal  Jan 20  Comment 
The U.S. Supreme Court is positioned to wipe out a major category of housing discrimination suits, and civil rights groups are running out of ways to stop it. In arguments Wednesday in Washington, the court will consider requiring people suing...




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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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