Liabilities

RECENT NEWS
The Hindu Business Line  Aug 13  Comment 
Cut-off lowered from ₹1 lakh based on members’ ability to repay, says industry body MFIN
Insurance Journal  Aug 13  Comment 
Zurich is launching a new management liability offering, specifically designed to protect small to medium enterprises (SMEs) in Australia, with turnovers up to AUD$50 million. The new product will be provided via “Z.stream,” the company’s...
The Economic Times  Aug 11  Comment 
Such a move would come as a partial relief for Indian companies that have overseas units, although the CBDT clarifications won’t be "open to the public,".
Insurance Journal  Aug 11  Comment 
The Hartford has expanded its management and professional liability insurance for asset management firms of all sizes, offering a blended liability policy with new and extended coverage to address key cyber and regulatory risks. “Today’s asset...
Insurance Journal  Aug 10  Comment 
ACE has launched ACE Risk Manager, a website designed for its employers’ liability (EL) clients in the UK and Ireland. Advice on the site is designed to help companies improve the management of health and safety risks across their organizations...
newratings.com  Aug 3  Comment 
NEW VALUE AG: Sale of liability claims EQS Group-Ad-hoc: NEW VALUE AG / Key word(s): Miscellaneous NEW VALUE AG: Sale of liability claims 03.08.2015 / 18:00 Release of an ad hoc announcement pursuant to Art. 53 KR. The issuer is solely...
New York Times  Jul 24  Comment 
The company says it will not contest lawsuits filed against it for the accident on May 12, but a federal cap on damages may leave victims with enormous bills.
Insurance Journal  Jul 22  Comment 
The Tennessee Supreme Court has determined that, in health care liability lawsuits, the obligation to disclose the number of violations of the certificate of good faith requirement does not compel any disclosure if there are no previous...
Insurance Journal  Jul 22  Comment 
Did you know that that an insurer can be liable for bad faith failure to settle even if it never receives a firm settlement offer? The Louisiana Supreme Court recently ruled that it can and also that an insurer can … The article Bad Faith...
WA Business News  Jul 21  Comment 
If your business’s leaders aren’t doing their job properly, chances are the rest of the team is underachieving too.




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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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