Definition of 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. However, liabilities can also be viewed as sources of the company's assets.
Examples of a Liability
Examples of a liability include:
- accounts payable
- loans payable
- wages payable
- interest payable
- customer deposits
- deferred revenues
