What are liabilities & examples?

In this article, we define liabilities, discuss types and examples and answer frequently asked questions about the topic. A liability is an amount of money or resources that an entity owes a different entity. Some examples of liabilities include accounts payable, accrued liabilities and bank account overdrafts.

What is a liability to you?

What is a liability to you is an asset to the party you owe. You can think of liabilities as claims that other parties have to your assets. On a company balance sheet, liabilities and assets are listed side by side. Liabilities are sorted into two general categories: current and long-term liabilities.

What are examples of short-term liabilities?

Some examples of short-term liabilities include payroll expenses and accounts payable, which include money owed to vendors, monthly utilities, and similar expenses. Other examples include: Wages Payable : The total amount of accrued income employees have earned but not yet received.

What is an example of contingent liability?

A product warranty is another example of contingent liability because the issuing company can only estimate how many returns there might be. Companies issue warranties to customers, but customers rarely collect on these agreements. The business records an estimated amount as a debit to warranty expense and as a credit to contingent liabilities.