Liabilities:

Liabilities

Liabilities are obligations of the company. Liabilities are incurred in order to fund the ongoing activities of a business. It is debt that arises during the course of business. Liabilities are settled over time through the transfer of economic benefits including money, goods or services. It is recorded on the right side on the balance sheet.

Liabilities may include:

• Loans
• Accounts payable
• Mortgage
• Deferred revenues
• Accrued expenses
• Wages
• Accounts
• Taxes/Income taxes
• Unearned revenues when adjusting entries
• Portions of long term bond to be paid
• Short-term obligations
• Long term bonds
• Notes payables
• Long-term leases
• Pension obligations
• Long-term product warranties
• Interest payable
• Lawsuits Payable
• Bonds payable
• Customer deposits      etc…  

Liabilities of uncertain value or timing are called provisions.

Classification:

1. Current liabilities — these liabilities are reasonably expected to be liquidated within a year. They usually include payables such as wages, accounts, taxes, and accounts payable, unearned revenue when adjusting entries, portions of long-term bonds to be paid this year, short-term obligations (e.g. from purchase of equipment).
2. Long-term liabilities — these liabilities are reasonably expected not to be liquidated within a year. They usually include issued long-term bonds, notes payables, long-term leases, pension obligations, and long-term product warranties.

The accounting equation relates assets, liabilities, and owner's equity:

Assets = Liabilities + Owner's Equity