Liabilities in Accounting are the financial obligation of the company as a result of any past events which are legally binding on it to be payable to the other entity, settling of which requires an outflow of the different valuable resources of the company and these are shown in the balance of the company.
Liabilities is an account in which the company maintains all its records like such as debts, obligations, payable income taxes, customer deposits, wages payable, expenses occurred. Liability accounts will normally have a credit balanceA Credit BalanceCredit Balance is the capital amount that a company owes to its customers & it is reflected on the right side of the General Ledger Account. Usually, Liability accounts, Revenue accounts, Equity Accounts, Contra-Expense & Contra-Asset accounts tend to have the credit balance. .
- Liability is an obligation, that is legal to pay like debt or the money to pay for the services or the goods utilized. They are settled over a particular period.
- Some of the examples of Liabilities are Accounts payable, Expenses payable, Salaries Payable, Interest payable. The opposite word of the liability is an Asset.
- For a bank, accounting liabilities include Savings account, current account, fixed deposit, recurring deposit, and any other kinds of deposit made by the customer. These accounts are like the money to be paid to the customer on the demand of the customer instantly or over a particular period of time. These accounts for an individual are referred to as the Assets.
List of Of Liabilities in Accounting
The following are a list of liabilities in accounting.
#1 – Current Liabilities
Current liabilitiesCurrent LiabilitiesCurrent Liabilities are the payables which are likely to settled within twelve months of reporting. They're usually salaries payable, expense payable, short term loans etc. are the obligations of a company that are supposed to be paid within twelve months or a year. These are generally called as Short term Liabilities
List of Current Liabilities
Here is the list of Current Liabilities Accounting are:
- Accounts payable – These are payables to suppliers with respect to the invoices raised when the company utilizes goods or services.
- Interest payable – The interest amount to be paid to the lenders on the money owned, generally to the banks.
- Accrued Expenses – These are the expense, i.e., the salaries which are payableSalaries Which Are PayableSalary payable refers to the liability of the company towards its employees against the amount of salary of a period that became due but has not been paid yet to them by the company and it is shown in the balance of the company under the head liability. to the employees in the future.
- Dividends – The dividends are declared The Dividends Are DeclaredDividend declared is that portion of profits earned that the company’s board of directors decides to pay off as dividends to the shareholders of such company in return to the investment done by the shareholders through the purchase of the company’s securities. to the shareholders by the company and are yet to be paid to the shareholders.
- Customer deposits – The deposits made by the customer for the utilization of the goods or services;
- Taxes payable –The taxes payable includes many types of taxes like Income tax, Sales Tax, Professional Tax, Payroll taxPayroll TaxPayroll taxes are statutory deductions made by the employer from an employee’s regular salary and wages, and usually, such withholdings mostly have both employer and employee equal contributions. These taxes are collected by tax authorities from respective employers and paid for human welfare schemes, infrastructure development..
- Bank Account overdrafts – These are the facilities given normally by a bank to their customers to use the excess credit when they don’t have sufficient funds.
- Current Maturities – This is the part of long term debtTerm DebtLong-term debt is the debt taken by the company that gets due or is payable after one year on the date of the balance sheet. It is recorded on the liabilities side of the company's balance sheet as the non-current liability. that is going to mature and due within the next twelve months.
- Bills payable – These bills generally include utility bills, i.e., Electricity bill, water bill, maintenance bills, which are payable.
#2 – Non-Current Liabilities
Non-Current liabilities are the obligations of a company that are supposed to be paid or settled on a long term basis generally more than a year. These are generally called as Short term Liabilities.
List of Non-Current Liabilities in Accounting
Here is the list of Non-Current Liabilities AccountingNon-Current Liabilities AccountingThe most common examples of Non-Current Liabilities are debentures, bond payables, deferred tax liabilities etc. Non-Current Liabilities are the payables or obligations of an entity which might not be settled within twelve months of accounting such transactions. –
- Bonds PayableBonds PayableBonds payable are the company's long-term debt with the promise to pay the interest due and principal at the specified time as decided between the parties. A bond payable account is credited in the books of accounts with the corresponding debit to the cash account on the issue date. – This is a liability account that contains the amount owed to bondholders by the issuer.
- Long term Loans – The long term loans are the loans that are taken and to be repaid in a longer period generally more than a year.
- Customer Deposits – The customer which is taken for a very long maturity more than a year, generally a Fixed deposit in a bank or for any longer duration contract;
- Mortgage Payable – This is the liability of the owner to pay the loan for which it has been kept as security and to be payable in the next twelve months.
- Unearned Revenue – unearned revenueUnearned RevenueUnearned revenue is the advance payment received by the firm for goods or services that have yet to be delivered. In other words, it comprises the amount received for the goods delivery that will take place at a future date. arises when the company failed delivered to the goods or services but has taken the money in advance.
- Deferred income taxesDeferred Income TaxesDeferred income tax is a balance sheet item that can be either a liability or an asset since it is a difference in income recognition between the firm's accounting records and the tax law, resulting in the company's income tax due being different than the total tax expense reported. – The income taxes that are due for the current period and have not yet been paid;
- Capital Lease – This is a lease agreement made between the owner and the person who wants for the temporary use
#3 – Contingent Liabilities
Source: Facebook SEC Filings
Contingent LiabilitiesContingent LiabilitiesContingent Liabilities are the potential liabilities of the company that may arise at some future date as a result of a contingent event that is beyond the company's control. are obligations that may or may not occur. These obligations may arise due to specific situations and conditions.
List of Contingent Liabilities
- Potential Lawsuits- This arises when a person gives a guaranteePerson Gives A GuaranteeA personal guarantee is an agreement between three parties – lender, borrower, and guarantor, whereby the guarantor has legal binding attached to him to repay the lender and honour the loan agreement if the borrower defaults. for another party if the actual party fails to pay the debt in time.
- Product Warranty – when a warranty is given on a product for a certain time and which gets damaged or spoiled that the company is liable to it and need to pay for that;
- Pending Investigations- Any pending investigations by the law, suppose if found defaulter than supposed to pay the penalty.
This article has been a guide to what is Liabilities and its meaning. Here we discuss the list of Accounting Liabilities along with its types (Current, non-current, and contingent) and examples. You can learn more about from the Accounting following articles –