What is a liability in accounting?

Liabilities are unsettled obligations to third parties that represent a future cash outflow — or more specifically, the external financing used by a company to fund the purchase and maintenance of assets. What is the Definition of Liabilities?

What do you need to know about liabilities?

Here’s everything you need to know about liabilities. What are liabilities in accounting? Liabilities are any debts your company has, whether it’s bank loans, mortgages, unpaid bills, IOUs, or any other sum of money that you owe someone else.

What are liabilities on a balance sheet?

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.

What is the difference between assets and liabilities?

Liabilities refer to things that you owe or have borrowed; assets are things that you own or are owed. A liability (generally speaking) is something that is owed to somebody else. Liability can also mean a legal or regulatory risk or obligation. In accounting, companies book liabilities in opposition to assets.