Liabilities

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The Economic Times  Oct 18  Comment 
The govt approved a DoT proposal for providing one-time financial support to MTNL for meeting liabilities arising from levy of minimum alternate tax (MAT).
Insurance Journal  Oct 15  Comment 
Massachusetts Gov. Deval Patrick has signed into law a bill that would require the Massachusetts Property Insurance Underwriting Association (MPIUA) — also known as the Massachusetts FAIR Plan — to have liability coverage included in its...
Insurance Journal  Oct 14  Comment 
Trinity Industries Inc. is set to defend itself a second time at trial against $1 billion in claims that its highway guardrail systems lock up and puncture cars on impact — sometimes with fatal consequences. Joshua Harman, a self-described...
SeekingAlpha  Oct 10  Comment 
By RB Equity: The following article is written mainly for investors and investment managers with significant allocation in their respective portfolios to individual stocks. These investors and managers are assumed to have a long term horizon and...
Insurance Journal  Oct 9  Comment 
The Ascension Parish Sheriff’s Office in Louisiana has proposed charging the town of Sorrento $353,832 for the first year with a possible increase of up to 5 percent the next year to provide policing services if voters decide Nov. 4 … The...
Insurance Journal  Oct 9  Comment 
Boston-based Berkshire Hathaway Specialty Insurance (BHSI) has launched Executive First Fiduciary Liability Insurance, a new addition to its Executive First suite of executive liability insurance products offering customizable coverage for...
Automotive World  Oct 6  Comment 
Automotive World speaks to Michael Cooney, Director of Litigation at US law firm Dykema, on the rise of product liability claims in the automotive sector and the most effective response for OEMs. The post An inside look at product liability...
The Economic Times  Oct 2  Comment 
LLPs have emerged as a preferred mode of investments owing to the flexibility they offer in terms of compliance and are a popular vehicle the world over.
Insurance Journal  Oct 1  Comment 
Jeff Kingsley, a partner with the law firm of Goldberg and Segalla, specializes in technology risks, notably cyber liability and cyber risk, an emerging sector with many variables and pit falls for the unwary, which he explained in an interview...




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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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