Liabilities

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Insurance Journal  Sep 21  Comment 
Prospect General Insurance Agency has partnered with Fortegra Financial Corporation, a Tiptree Financial, Inc. company to offer an admitted tenant legal liability program that allows landlords to protect properties from tenant caused damage. The...
Insurance Journal  Sep 19  Comment 
Markel Corporation has enhanced its policy form and protections for hard-to-insure law firms which can no longer secure coverage in the admitted markets. This coverage is available on an excess and surplus (E&S) lines basis using a claims-made...
Insurance Journal  Sep 12  Comment 
Less than a day after Equifax revealed one of the biggest data breaches in U.S. corporate history, the credit reporting company has already been hit with two proposed class actions in federal court – and one of those cases was …
BBC News  Sep 3  Comment 
The limited liability company has been described as "the greatest single discovery of modern times”.
Insurance Journal  Aug 23  Comment 
A massive California verdict in a lawsuit alleging Johnson & Johnson’s talc-based products cause cancer has opened a new front in the litigation, upending the company’s hopes that the cases were only gaining traction in Missouri, legal experts...
Insurance Journal  Aug 16  Comment 
Some activists are pushing to change rules that require groups to obtain $1 million in liability insurance before holding a protest at the Iowa Capitol, claiming the rule threatens free speech. The Iowa Department of Administrative Services says...
Insurance Journal  Aug 14  Comment 
The parents of an 8-year-old Ohio boy who hanged himself from his bunk bed with a necktie want school officials held responsible, testing the issue of school liability in suicides blamed on bullying. The wrongful death lawsuit filed by the …




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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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