Liabilities (Balance Sheet)

Balance Sheet 

2.) Liabilities  

Liabilities are what a company owes to others—its financial obligations or debts. These can include money owed to suppliers, loans from banks, salaries payable, taxes owed, and other commitments. In short, liabilities are the company’s financial responsibilities to outside parties.

Types of Liabilities:

  1. Current Liabilities – Due within 1 year 

  1. Accounts Payable

  • Amounts owed to suppliers for goods or services purchased on credit

  • Typically due within 30–90 day

  • INCLUDE credit card payments in accounts payable 

    • Or we can make another account called “Credit Card Payable” 

  1.  Short-Term Loans Payable

  • Borrowings from banks or other lenders due within a year

  • Includes short-term credit lines or promissory notes

  1. Accrued Expenses

  • Expenses incurred but not yet paid

  • Examples: wages, interest, utilities, and taxes

  1. Unearned Revenue

  • Payments received in advance for goods or services not yet delivered

  • Considered a liability until the product or service is provided

  1.  Current Portion of Long-Term Debt

  • The portion of a long-term loan that is due within the next year

  • Reported separately from the non-current portion

  1. Taxes Payable

  • Amounts owed to the government for income, sales, or payroll taxes

  • Typically due in the short term

  1. Dividends Payable

  • Dividends declared but not yet paid to shareholders

  • Usually paid within a few weeks of declaration

  1. Non-Current Assets – Obligations due after 1 year 

  1. Long-Term Loans Payable

  • Loans or borrowings with repayment due beyond one year

  • Includes mortgages, term loans, and long-term bank debt

  1. Deferred Tax Liabilities

  • Taxes owed in the future due to timing differences between accounting and tax rules

  • Common with depreciation differences


  1.  Lease Liabilities (Long-Term Portion)

  • Future lease payments for finance/capital leases beyond one year

  • Often related to property or equipment

  1. Pension Liabilities

  • Obligations under employee retirement plans

  • Represent expected future pension payments

  1. Bonds Payable (not applicable yet) 

  • Debt securities issued by the company with long-term maturity

  • Includes repayment of principal and interest over time

  1. Notes Payable (Long-Term)

  • Written promises to pay specified amounts after more than one year

  • Used for long-term financing or major purchases

  1. Contingent Liabilities

  • Potential obligations based on future events

  • Examples: pending lawsuits, warranties, or guarantees