What is Liability?

Liability Definition: Liability refers to a company or a person who owes payment or provides goods or services.

Liabilities are listed as accounts payable on a balance sheet, which means the company or individual must pay or is owing a specific amount for goods, services, and money.

These accounts are settled through the financial transfer of funds for services and are recorded as payables, including deferred revenues, accrued expenses, and mortgages.

Assets are the opposite of liabilities and refer to owned and accumulated items. There are two different types of liabilities: short-term and long-term.

A short-term liability is paid off within one year, such as a small loan, while long-term payables or liabilities are paid over a period of multiple years, such as a mortgage or car.

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