Liabilities; Liability; Debt
A liability is an obligation of a company; they are money that a company owes. Any Payment of this liability will result in the transfer or use of assets such as the payment of cash, providing services or transfer of economic benefits to the organization to whom the liability is owed. Liabilities are classified as either current or non-current. Non-current liabilities are also referred to as long-term liabilities. Any account that includes the word payable are a liability.
Current liabilities are debts that are due within a year. Accounts payable represents money owed to suppliers for purchases of goods or services made on open account credit terms. Generally, liabilities are payable in cash, but occasionally they are paid in goods or services in a barter arrangement. Notes payable usually represent debts owed to banks or other financial institutions, or to individuals or other companies involving short-term loans. Accounts payable are funds owed for merchandise purchased on open account terms. Accrued wages are wages earned but as yet unpaid to employees. Advance payments involves money already accepted from customers for goods or services as yet undelivered.
Provisions for taxes due are taxes owed within one year but not yet due to the taxing authority. Current maturities on deferred debts are interest payments owed on deferred [long term] debts. Long-term debts [such as mortgage payable] are obligations that are not due within one year, and therefore not classified as current liabilities. Long-term debts may include money borrowed to buy machinery and equipment or to finance building construction, or purchase property and buildings.
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