Definition of A Liability?

A liability is any debt that is owed by a firm, individual or country. Liabilities detract from value and are used to finance assets.

All liabilities are listed on a company's balance sheet and are defined as either current (held for less than one year) or long term (held for more than one year). The most common kinds of liability found on a balance sheet are listed below:

Current Liabilities

• Accounts Payable
• Accrued Expenses

Long Term Liabilities

• Deferred Long Term Revenue
• Long Term Debt