What Are Liabilities? (2024)

FAQs

What Are Liabilities? ›

A liability is simply a debt or obligation. Most people have liabilities in their day-to-day lives: car payments, rent, and credit card bills. In corporate finance, liabilities are similar, just on a much larger scale.

Liabilities are settled over time through the transfer of economic benefits including money, goods, or services. Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses. Liabilities can be contrasted with assets.

A liability is a debt or obligation you have that you're servicing. Examples include: Home loan/mortgage. Maximum limit on a credit card (lenders typically look at maximum limits rather than whatever balance you may have owing on your card or loan) Maximum limit for a personal loan or overdraft.

Personal liability

In personal finances, a liability is a debt you owe a lender, such as home mortgages, student loans, car loans and credit card debts. Some forms of liability can enable further financial goals.

Liabilities are things and ventures that cost you money. Liabilities don't generate income, but create constant, regular expenses for you. Examples of liabilities include any type of loan you are paying back, such as for real estate or student loans.

Businesses regularly owe money, goods, or services to another entity. Examples of liabilities are bank loans, overdrafts, outstanding credit card balances, money owed to suppliers, interest payable, rent, wages and taxes owed, and pre-sold goods and services.

Contingent liabilities are potential obligations dependent on specific future events. What are basic liabilities? Basic liabilities are financial obligations or debts that a business or individual owes to external parties.

Some examples of current liabilities that appear on the balance sheet include accounts payable, payroll due, payroll taxes, accrued expenses, short-term notes payable, income taxes, interest payable, accrued interest, utilities, rental fees, and other short-term debts.

Meaning of personal liability in English. the fact of a person, rather than a company or organization, being legally responsible for something: Under certain conditions, trustees can take out insurance against personal liability.

Liabilities are debts or obligations a person or company owes to someone else. For example, a liability can be as simple as an I.O.U. to a friend or as big as a multibillion dollar loan to purchase a tech company.

What is liability in one sentence? ›

1. [noncount] : the state of being legally responsible for something : the state of being liable for something. The company is trying to limit its liability in this case. criminal liability [=the state of being responsible for a crime] The judge cleared me of any/all liability for the accident.

If you say that someone or something is a liability, you mean that they cause a lot of problems or embarrassment. As the president's prestige continues to fall, they're clearly beginning to consider him a liability. A company's or organization's liabilities are the sums of money which it owes.

The most common known liabilities are accounts payable, sales tax payable, payroll liabilities, and contracted notes payable. All of these debts arise from contracts, agreements, or laws that state how much the company owes, whom it owes the money, and how much it owes.

Your utility bill would be considered a short-term liability. Long-term liabilities are debts that will not be paid within a year's time. These can include notes payable and mortgages, although the portion that is due within the year should be classified as a short-term liability.

A liability is money you owe to another person or institution. A liability might be short term, such as a credit card balance, or long term, such as a mortgage.