What is a Liability?

A liability is money the business owes to others, either individuals or other businesses or organizations.

How it Works

A business will have assets.

​These are things the business owns—or money owed to the business. 

A business will also have liabilities.

This is money owed to others.

For example, the loan account shows money owed to a lender. 

The suppliers accounts show money owed to suppliers.

Money owed for tax is also a liability.

​So, too, are accrued expenses, or likely expenses that are yet to be invoiced.

© R.J. Hickman 2020