Liabilities

RECENT NEWS
Insurance Journal  Sep 28  Comment 
A British court fined Merlin Entertainments 5 million pounds ($6.5 million) on Tuesday over a rollercoaster crash at its Alton Towers theme park in June last year that seriously injured five people. Merlin, the world’s second-biggest visitor...
Insurance Journal  Sep 26  Comment 
Ponderosa Insurance Agency has introduced a self-storage property and liability insurance available directly to U.S. self-storage operators that includes more coverage such as flood and California/Pacific Northwest earthquake. Ponderosa is a...
Insurance Journal  Sep 23  Comment 
QBE North America’s Commercial Insurance business has introduced a manufacturing E&O endorsement to its product liability product offering. The manufacturing E&O endorsement is a claims made coverage form providing broad coverage on a simple...
Insurance Journal  Sep 23  Comment 
There has been a marked increase in the number of companies purchasing environmental impairment liability (EIL) cover across Europe in recent years, mainly due to an increase in regulation and buyer awareness, according to a report published by...
newratings.com  Sep 19  Comment 
UET United Electronic Technology AG fully integrates operating companies via Capital Increase and reduces liabilities. UET United Electronic Technology AG / Key word(s): Capital Increase/Miscellaneous 19.09.2016 13:00 Disclosure of an inside...
newratings.com  Sep 16  Comment 
NEW VALUE AG: Liability claims settlement EQS Group-Ad-hoc: NEW VALUE AG / Key word(s): Legal Matter NEW VALUE AG: Liability claims settlement 16.09.2016 / 17:48 Release of an ad hoc announcement pursuant to Art. 53...
Insurance Journal  Sep 14  Comment 
Liberty International Underwriters (LIU) and program administrator Huntersure LLC have partnered to offer transactional liability insurance. This program will offer coverages for representations and warranties, tax liability (including tax opinion...
Insurance Journal  Sep 9  Comment 
A judge this week ordered the Washington Attorney General’s Office to give him internal emails that might help explain when state lawyers handling a case about liability for the devastating Oso landslide realized that their expert witnesses...
Insurance Journal  Sep 8  Comment 
Allianz Global Corporate & Specialty (AGCS) is expanding its global Environmental Impairment Liability (EIL) team with new senior hires in the North American and Mediterranean regions. “Environmental claims pose an immense financial and...
Insurance Journal  Sep 7  Comment 
Chicago Underwriting Group Inc., the professional liability underwriting division of Old Republic Insurance Co., is changing its name to Old Republic Professional Liability Inc. The company said the new name more clearly identifies with its...




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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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