Liabilities

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Insurance Journal  Jan 11  Comment 
As Alabama and Clemson prepared for the national college football championship game kick-off the other day, the U.S. House of Representatives passed a bill on liability rules for sports medicine physicians and athletic trainers. The Sports...
Insurance Journal  Jan 9  Comment 
The U.S. Supreme Court on Monday let stand a lower court’s decision that an online advertising site accused by three young women of facilitating child sex trafficking was protected by a federal law that has shielded website operators from...
Insurance Journal  Jan 6  Comment 
Kinsale Insurance Co. (Kinsale), a subsidiary of Kinsale Capital Group, Inc., is now offering educational institution (school board) liability coverage through its Public Entity Division. The division targets hard-to-place/distressed educational...
Financial Times  Jan 4  Comment 
Broker predicts a record number of deals in 2017 as interest rates rise
Insurance Journal  Jan 3  Comment 
The Hartford has signed a reinsurance agreement  effective Dec. 31, 2016 with National Indemnity Co. (NICO), a subsidiary of Berkshire Hathaway Inc., for a $1.5 billion aggregate excess of loss reinsurance agreement covering certain of The...
The Hindu Business Line  Dec 21  Comment 
The Cabinet on Wednesday approved the sale of surplus and vacant land of state-run Hindustan Antibiotics Ltd (HAL) in Pimpri, Pune to meet liabilities worth Rs 821.17 crore. HAL is the country’s fi...
Insurance Journal  Dec 20  Comment 
The parties who have a potential legal claim in the fatal collapse of a building in downtown Sioux Falls, S.D., have had a final opportunity to inspect the ruins before crews start removing critical pieces of the building. Lawyers and experts...
Insurance Journal  Dec 8  Comment 
For two years, stock traders and the attorneys who represent them said insider-trading law was a muddle, with no one knowing exactly what was or wasn’t legal. On Tuesday, the U.S. Supreme Court said it had “easily” settled the question. …




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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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