Liabilities

RECENT NEWS
Insurance Journal  Jul 18  Comment 
As data breaches become more prevalent in the workplace, ISO, a member of the Verisk Insurance Solutions group at Verisk Analytics in Jersey City, N.J., has been taking steps to constrain commercial general liability policies based on ISO forms...
Insurance Journal  Jul 18  Comment 
Chief Executive Insurance Services has launched an enhanced personal director’s liability (PDL) policy. Coverage is available to members of Chief Executive Group and their spouses, as well as non-members through agents and brokers. This enhanced...
New York Times  Jul 17  Comment 
The Montreal Convention requires the airline to pay compensation for passengers killed in a crash, regardless of whether it is at fault.
Insurance Journal  Jul 16  Comment 
Insurance industry professionals and attorneys are closely following the most recent concussion-based litigations as they proceed through state and federal courts. Just last week in the well-publicized In re National Football League players’...
The Hindu Business Line  Jul 10  Comment 
Arun Jaitley holds forth on retrospective tax, his GST plans and FDI in insurance
Insurance Journal  Jul 9  Comment 
Doha-based Qatar Re has announced the appointment of Stephan Rappaz as Global Head of Liability, effective December 1, 2014. Rappaz joins from New Re where, most recently, he was Head of Casualty Underwriting. Prior assignments at New Re include...
newratings.com  Jul 8  Comment 
Agreement to reduce the financial liabilities of Hansa Group AG unexpectedly and surprisingly not fully implemented - other restructuring options are being openly looked into - change to the Management Board Hansa Group AG / Key word(s):...
Insurance Journal  Jul 2  Comment 
Bermuda-based Catalina Holdings announced that, following receipt of regulatory approval from the Swiss Financial Market Supervisory Authority (FINMA), it has completed its reinsurance transaction with Delta Lloyd under which a portfolio of marine...
Insurance Journal  Jul 1  Comment 
The Massachusetts Association of Insurance Agents (MAIA) is pushing a bill, S-465, that would require the Massachusetts Property Insurance Underwriting Association (MPIUA), also known as the Massachusetts FAIR Plan, to have liability coverage...




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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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