Liabilities

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Benzinga  8 hrs ago  Comment 
ISO is preparing insurers for the rise of commercial drones around the world by offering new and versatile coverage options. ISO is a Verisk Analytics (Nasdaq: VRSK) business. The new endorsements address the growing liability exposures...
Insurance Journal  Dec 12  Comment 
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New York Times  Dec 5  Comment 
The home-sharing business now has secondary coverage, which kicks in after a homeowner’s primary insurance.
Yahoo  Dec 4  Comment 
UBS said on Thursday it will set up a separate group asset and liability unit to help it manage risk in the bank's new structure, which ensures it can be broken up more easily in case of a renewed crisis. ...
Forbes  Dec 4  Comment 
Peers, a sharing economy advocacy group, is selling two new insurance products meant to protect the income streams of people who work on Airbnb, Uber, Lyft and similar platforms. One is a home liability insurance policy, and the other is a...
Insurance Journal  Nov 25  Comment 
Cyber liability insurance isn’t just for large corporations anymore. Demand for cyber liability insurance is now coming from middle-sized and small businesses, according to an insurance CEO who believes the market potential is tremendous. “Now...
Insurance Journal  Nov 24  Comment 
Newly sworn-in trustees in Oakley, Mich., are reinstating the village’s police department after its shutdown in September. The Saginaw News reports the village council voted 3-2 to re-establish the police force. It also approved liability...
Insurance Journal  Nov 21  Comment 
The fast-growing online residential space sharing service Airbnb has added a $1 million liability insurance policy that protects those, including landlords and homeowners associations, facing lawsuits related to the renting of their properties...
Insurance Journal  Nov 21  Comment 
Nebraska’s insurance company is asking a judge to declare that it has no duty to pay any award made against the Nebraska State Colleges Board of Trustees in a lawsuit over the 2010 disappearance of a Peru State College student … The article...




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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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