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pohnpei397 eNotes educator| Certified Educator

Liabilites can be seen as the opposite of assets.  While an asset is something that has economic value to a firm, a liability is something that the firm owes to someone else.  Liabilities, then, are the debts or obligations that a firm incurs in the course of its business operations.

There can be many kinds of liabilities.  There are current liabilities, which must be paid off in the short term.  These include such things as wages owed to workers and taxes owed to the government.  There are long term liabilities that do not need to be paid off within a year.  These include such things as mortgages.  Finally, there are contingent liabilities.  These are things that the firm may or may not have to pay at some point.  This could include something like the damages a firm would have to pay in the event that it loses a lawsuit.

What all of these have in common is that they are obligations that are owed by the firm in question.

sasikumarupadhaya | Student

the liabilities can be learned from the following accounting equation:

assets= capital + liabilities.

liabilties is the sum of money owed to the bankers and creditors. in other words, liabilties is the net amount obtained by subtracting the capitl amount from the assets. it is simply defined as the payable amount. liabilities can be of variety types; long ter liabilities, mid term liabilities and the short term liabilties. liabilities are maintained at the left had side of the balance sheet with T- format.