What is a 'Liability'?

A liability is defined as a company's legal financial debts or obligations that arise during the course of business operations. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Term of the Day Liability A liability is defined as a company's legal financial debts or obligations that arise during the course of business operations. 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 and accrued expenses. Breaking it Down: Liabilities are a vital aspect of a company because they are used to finance operations and pay for large expansions.... Read More » Related to "Liability" Evaluating Your Personal Financial Statement Determine your net worth by making your own cash flow statement and balance sheet. Read More » Understanding Off-Balance Sheet Financing For anyone who was invested in Enron, off-balance sheet (OBS) financing is a scary term. Off-balance sheet financing means a company does not include a liability on its balance sheet. It is an accounting term and impacts a company's level of debt and liability. Read More » How dividends affect stockholder equity Find out how dividends affect a company's stockholder equity and how the accounting process changes based on the type of dividend issued. Read More » Related Definitions Accrued Liability An accrued liability is an accounting term for an expense that a business has incurred but has not yet paid. Read More » Shareholders' Equity (SE) Shareholder's equity (SE) is the owner's claim after subtracting total liabilities from total assets. Read More » Aggregate Product Liability Limit Aggregate product liability limit is the maximum sum of money an insurance company will pay when a product's liability insurance coverage is in effect. Read More » Liability Insurance Liability insurance is insurance that provides protection against claims resulting from injuries and damage to people and/or property. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy