A liability is something a person or company owes, usually a sum of money. ... Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.A liability is something a person or company owes, usually a sum of money. ... Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.

A liability is something a person or company owes, usually a sum of money. ... Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.

Discuss the characteristics and the categories of liabilities as described in any business article.

 

Characteristics of Liabilities

Liabilities are debts owed by a person or a company. They are settled timely by the transfer of goods, money, services, or other economic benefits. Liability has three characteristics; One is that liability encompasses a present duty to one or more of the other entities, including the future transfer of assets on a specified date or demand (Bova, 2016). Secondly, liability is characterized by responsibility or duty that is obligated to a particular entity without any discretion in the bid to avoid future sacrifices. Then finally, liability is characterized by occurrences of transactions obligated to such entities.

Categories of liability

All business ventures sort their liability into two different kinds that are current or long-term liabilities. Such sorting gives the business an adequate measure to deal with certain liability. The appropriateness and management strategies of liabilities are also dependent on the type of liability. Current or short-term liabilities are payable debts within a span of one-year examples like employees' wages, invoices, and utility bills (Lessambo, 2018). Long-term liabilities are payable over more than a year; for instance, a business can consider taking a mortgage that is payable after 15 years, then that is a long-term liability (Laurens, & Tampang, 2018). However, long-term liabilities can still compose short-term liabilities like when some of the mortgage payments can be due within one year under the same 15-year span and recorded as short-term liabilities on the balance sheet. Other long-term liabilities companies can incur include deferred taxes, rent, pension obligations, or rents. Other additional short-term liabilities include monthly utilities, cash owed to vendors, or similar expenses. Current liabilities are desirably paid in cash due to their yearly durations, while long-term liabilities payment is always preferred to be paid with future earned assets.