Liabilities

RECENT NEWS
Insurance Journal  Jul 26  Comment 
A federal jury in Chicago on Monday found AbbVie Inc. fraudulently misrepresented the risks of its testosterone replacement drug AndroGel and ordered the drugmaker to pay $150 million in punitive damages. The verdict, which came in response to a...
Insurance Journal  Jul 25  Comment 
The Texas Department of Insurance is accepting applications through August 31 for the public member positions on the Texas Medical Liability Insurance Underwriting Association Board of Directors. The appointment is for one year. The association is...
Insurance Journal  Jul 20  Comment 
A federal jury in New York on Wednesday found General Motors was not to blame for a crash of an Arizona man who alleged that his accident was caused by an updated version of the carmaker’s ignition switch that did …
Insurance Journal  Jul 19  Comment 
Norman-Spencer Agency, Inc., a national property and casualty insurance provider, has added a new Professional Liability Division. The division was established to provide Norman-Spencer’s appointed agents with a resource for all professional...
Forbes  Jul 14  Comment 
A stuntman for "The Walking Dead" has died after a serious accident on set.
Insurance Journal  Jul 13  Comment 
The Hartford has expanded its flagship management liability offering, Private Choice Premier, to include management liability coverage integrated with risk management services for nonprofit organizations. Private Choice Premier for nonprofits...
Insurance Journal  Jul 11  Comment 
The McGowan Companies (McGowan), headquartered in Fairview Park, Ohio, announced it acquired North American Professional Liability Insurance Agency LLC (NAPLIA), effective April 1. NAPLIA will be re-branded under the McGowan Program Administrators...
The Hindu Business Line  Jul 9  Comment 
In a long-awaited, welcome move, the RBI has issued a revised notification that limits the liability of customers in case of loss due to unauthorised electronic banking transactions. In case of t...
The Economic Times  Jul 8  Comment 
As per RBI’s new norms, the bank shall credit the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days of notification by the customer.




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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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