Liabilities

RECENT NEWS
Insurance Journal  May 22  Comment 
Liability insurers, their lawyers and their regulators are holding their collective breath that a scheduled vote this week on a proposed restatement of law regarding liability insurance will not happen. If approved, the controversial restatement...
Insurance Journal  May 11  Comment 
A bill requiring Hawaii child care providers to obtain liability insurance has passed its final reading in the House. The bill is awaiting Gov. David Ige’s signature to go into effect, Hawaii News Now reported. The bill would increase oversight …
Insurance Journal  May 11  Comment 
Allianz Global Corporate & Specialty SE (AGCS), the corporate insurance unit of Allianz SE, is working with Praedicat, the Los Angeles-based insurtech analytics firm, to better predict key catastrophe liability risks. The partnership aims to find...
Insurance Journal  May 11  Comment 
Catalina Holdings (Bermuda) Ltd. announced that its wholly owned subsidiary, Catalina Holdings UK Ltd., has completed its acquisition of Hartford Financial Products International Ltd. and Downlands Liability Management Ltd. from The Hartford...
Insurance Journal  May 5  Comment 
Johnson & Johnson and Bayer AG aren’t responsible for a Xarelto user’s internal bleeding, a jury found in the first trial over the blood-thinning drug. J&J and Bayer didn’t mislead a Louisiana man and his doctors about the blood-thinning...
Insurance Journal  May 1  Comment 
Berkshire Hathaway Specialty Insurance (BHSI) announced it has expanded its Executive First policy suite in Canada with the launch of an employment practices liability policy. The policy is designed to protect companies from the full range of...
WA Business News  Apr 27  Comment 
The state government has proposed changes to the Corporations Act to deal with mining companies that avoid their environmental obligations.
Insurance Journal  Apr 25  Comment 
XL Catlin’s Multinational Casualty business has introduced a new international liability coverage form designed for U.S.-based multinational companies to address their most complex casualty needs. The XL Catlin’s International Liability policy...




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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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