What is a liability in accounting?

What is a liability? A liability is an obligation arising from a past business event. It is reported on a company's balance sheet. Liabilities are also part of the basic accounting equation: Assets = Liabilities + Stockholders' Equity. Liabilities are often viewed as claims against the company's assets.

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.

Are liabilities in financial accounting legally enforceable?

Liabilities in financial accounting need not be legally enforceable; but can be based on equitable obligations or constructive obligations. An equitable obligation is a duty based on ethical or moral considerations.

What are the different types of liabilities in accounting?

They are settled over a particular period. Liability accounts will normally have a credit balance. Some of the liabilities in accounting examples are accounts payable, Expenses payable, salaries payable, and interest payable. The opposite word of liability is an Asset.