Liabilities

RECENT NEWS
Insurance Journal  Jul 9  Comment 
Specialist run-off acquirer and manager AXA Liabilities Managers (AXA LM) has acquired the legacy assumed portfolio of Cologne-based Gothaer Finanzholding A.G., which is been in run-off since it ceased trading in 2004. The transaction was in the...
Insurance Journal  Jul 6  Comment 
California lawmakers may change the standard for determining whether utilities are liable for wildfire damage following the worst wildfire season in state history. Gov. Jerry Brown and legislative leaders said on July 2 that they are forming a...
Insurance Journal  Jul 3  Comment 
Gov. Kim Reynolds signed more than 170 bills during and after the legislative session and most of those laws took effect on July 1, the start of Iowa’s new budget year. Among the new laws in effect that may affect …
Insurance Journal  Jul 2  Comment 
The U.S. Supreme Court on Thursday agreed to hear Merck & Co.’s appeal of a lower court’s ruling that revived hundreds of lawsuits accusing the company of failing to adequately warn patients of the risks of thigh bone fractures associated …
Insurance Journal  Jun 29  Comment 
Talage Inc. is an insurtech to its core – both in function and name. The Reno, Nev.-based software platform designed to help small business owners compare and quickly purchase a range of commercial insurance policies announced this week that it …
Insurance Journal  Jun 28  Comment 
Aon plc has launched a new insurance product designed to cover clients’ intellectual property liability, including patents, copyrights, trademarks, trade secrets and know how. This is the latest offering in Aon’s suite of integrated IP...
Insurance Journal  Jun 21  Comment 
Chicago-based ISMIE Indemnity, an excess and surplus line division of ISMIE Mutual Insurance Co., plans to offer medical professional liability insurance products in every state in the U.S. With approval from state insurance regulators, ISMIE...
Insurance Journal  Jun 21  Comment 
Nevada’s new liability coverage minimums go into effect next month. The new standards require drivers to be covered for at least $25,000 in bodily injury per person, $50,000 per crash and $20,000 for property damage per wreck. According to the …
Insurance Journal  Jun 18  Comment 
A recent Iowa Supreme Court decision involving a 2013 car accident on a northwest Iowa county road could make it more difficult for citizens to hold city, county and state officials responsible when people are hurt as the result of …




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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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