Liabilities are sums owed by a person or company, usually cash, that are settled through the transfer of cash, goods, or services. On balance sheets, liabilities are recorded on the right side against the figure’s assets. Liabilities include loans, accounts payable for goods or services, mortgages, deferred revenues, bonds, warranties, and accrued expenses.
Liabilities may also refer to a legal or regulatory risk or obligation.
Types of liabilities: current vs non-current
Liabilities are typically divided into two types based on when they are expected to be resolved.
- Current liabilities are those expected to be concluded within a year and are consider ‘short-term’
- Non-current liabilities are those expected take over a year to conclude and are considered ‘long-term’