Liabilities

RECENT NEWS
Forbes  Sep 16  Comment 
Today the UK's corporate governance code has been updated by the independent regulator, the Financial Reporting Council (FRC).
DailyFinance  Sep 16  Comment 
Travelers (NYSE: TRV) today announced the addition of Healthcare Exchange and Civil Money Penalties coverages to its management liability portfolio as a way to help protect against risks related to the Patient Protection and ...
Insurance Journal  Sep 15  Comment 
Claims severity and demand for liability insurance will increase as economic growth accelerates and because of technological, social and regulatory changes, according to a new report from Swiss Re. Cyber risk, hydrofracking and autonomous cars...
Insurance Journal  Sep 11  Comment 
Officials in a small Saginaw County village have shut down their police department until it gets liability insurance. The Saginaw News reports the Oakley Board of Trustees voted 5-1 on Sept. 9 to disband the force of about a dozen certified...
Insurance Journal  Sep 10  Comment 
NAS Insurance Services, an underwriting manager of specialty insurance, has introduced its new suite of cyber liability insurance services to respond to the growing needs of businesses facing constant threats of privacy and security breaches. NAS...
Forbes  Sep 8  Comment 
A U.S. federal judge has ruled that BP Plc. was grossly negligent in the lead-up to the 2010 Deepwater Horizon incident. This could increase the London-based oil and gas giant’s total liabilities by as much as $14.5 billion. The company has come...
Yahoo  Sep 6  Comment 
District Judge Carl Barbier in New Orleans, Louisiana, on Thursday found that BP was guilty of "gross negligence" ahead of the rig explosion in the Gulf of Mexico. The "gross negligence" designation could quadruple BP's federal financial...
BusinessWeek  Sep 4  Comment 
The finding of gross negligence is a maritime legal term of art more akin to “recklessness,” and it will likely prove costly for the oil giant
Insurance Journal  Sep 4  Comment 
A red VW Golf jerks back and forth as it maneuvers into a parking space in the English spa town of Cheltenham. The halting efforts resemble those of a new driver, and in a sense they are — just not … The article Hacking Risk and Liability...
Reuters  Sep 3  Comment 
Citigroup Inc has agreed to remit $217,841 to settle potential civil liability for apparently violating multiple sanctions programs of the Office of Foreign Assets Control (OFAC), the U.S. Department of Treasury said on Wednesday.




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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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