Liabilities – Meaning, Types and Examples

Meaning-of-liabilities

The liabilities are those valuable things which the business owes (Loans) someone else or other business and which have to pay in future. These arise during the course of business operation. 

Example: –

  • Debenture
  • Mortgage Loan 
  • Long Term Loans
    • From Banks
    • From Financial Institution
    • From Partners
  • Security Deposit 
    • Vendors
    • Customers
  • Sundry Payable 
    • Trade Creditors
    • Other Creditors 
  • Outstanding Expenses 
  • Pre received Incomes

Type of Liabilities: –

All liabilities can be classified into three types shown below: 

  1. Fixed Liability
  2. Current Liability
  3. Contingent Liability

1. Fixed Liability

A fixed liability is a type of debt which is payable over a term exceeding one year. These debts are better known as non-current liabilities or long-term liabilities

Examples: –

  • Debenture
  • Mortgage Loan 
  • Long Term Loans
    • From Banks
    • From Financial Institution
    • From Partners
  • Security Deposit 
    • Vendors
    • Customers

2. Current Liability

A current liability is a type of debt which is expected to be pay within a year (Maximum 1 year). These are also known as short-term liabilities.

Example – 

  • Short Term Loans
  • Sundry Payable 
    • Trade Creditors
    • Other Creditors
    • Bills Payable
  • Outstanding Expenses

3. Contingent Liability

It refers to that amount of Liability which may or may not become payable in future.

Example – 

  • Financial Case pending
  • Guarantees Undertaken on Behalf of others

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