{"id":67,"date":"2024-09-06T16:46:07","date_gmt":"2024-09-06T16:46:07","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/liabilities\/"},"modified":"2024-09-18T18:37:52","modified_gmt":"2024-09-18T18:37:52","slug":"liabilities","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/liabilities\/","title":{"raw":"Liabilities","rendered":"Liabilities"},"content":{"raw":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\r\n<ul>\r\n \t<li>Define liabilities<\/li>\r\n<\/ul>\r\n<\/section><section class=\"textbox keyTakeaway\" aria-label=\"Key Takeaway\">\r\n<h3>[latex]\\text{Liabilities}=\\text{Debt}[\/latex]<\/h3>\r\n<strong>Liability<\/strong> is the accounting term for debt. Like assets, liabilities are categorized as current and noncurrent.\r\n\r\n<\/section>\r\n<p style=\"padding-left: 30px;\"><\/p>\r\n\r\n<h2>Liability Subcategories<\/h2>\r\nThere are a wide variety of items that can be liabilities, and many accounts are unique to a specific company, but the following categories give you the flavor of current and noncurrent liabilities.\r\n<h3>Current Liabilities<\/h3>\r\nHere are some common current liabilities:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">Accounts Payable (owed to vendors, e.g. companies from which we buy inventory)<\/li>\r\n \t<li style=\"font-weight: 400;\">Trade Accounts Payable (another term for Accounts Payable)<\/li>\r\n \t<li style=\"font-weight: 400;\">Wages Payable (wages we owe to our employees for work they\u2019ve done but for which they haven\u2019t been paid yet)<\/li>\r\n \t<li style=\"font-weight: 400;\">Taxes Payable (taxes we owe that we haven\u2019t paid yet)<\/li>\r\n \t<li style=\"font-weight: 400;\">Short-term loans (like lines of credit that are paid back monthly)<\/li>\r\n \t<li style=\"font-weight: 400;\">Current Portion of Long-Term Debt (the principal balance on long-term debt that is due within the next twelve months)<\/li>\r\n<\/ul>\r\n<h3>Noncurrent Liabilities<\/h3>\r\nHere are some common noncurrent liabilities:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">Notes Payable (long term debt, less the Current Portion that is due within the next year)<\/li>\r\n \t<li style=\"font-weight: 400;\">Bond Payable (another form of long-term debt)<\/li>\r\n \t<li style=\"font-weight: 400;\">Leases Payable (long-term portion only\u2014the current portion is reported as a current liability)<\/li>\r\n<\/ul>\r\nIn common (non-accounting) usage, a liability is something for which you are responsible. Sometimes that term is also used to indicate a burden, or even an embarrassment, as in, \u201cHe had become a political liability.\u201d However, in accounting, it really just means a debt or something you owe, and it\u2019s always expressed in money.\r\n\r\nCheck your understanding of liabilities, and then we'll move on to define owner\u2019s equity.\r\n\r\n<section class=\"textbox tryIt\" aria-label=\"Try It\">[ohm2_question hide_question_numbers=1]25096[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\n<ul>\n<li>Define liabilities<\/li>\n<\/ul>\n<\/section>\n<section class=\"textbox keyTakeaway\" aria-label=\"Key Takeaway\">\n<h3>[latex]\\text{Liabilities}=\\text{Debt}[\/latex]<\/h3>\n<p><strong>Liability<\/strong> is the accounting term for debt. Like assets, liabilities are categorized as current and noncurrent.<\/p>\n<\/section>\n<p style=\"padding-left: 30px;\">\n<h2>Liability Subcategories<\/h2>\n<p>There are a wide variety of items that can be liabilities, and many accounts are unique to a specific company, but the following categories give you the flavor of current and noncurrent liabilities.<\/p>\n<h3>Current Liabilities<\/h3>\n<p>Here are some common current liabilities:<\/p>\n<ul>\n<li style=\"font-weight: 400;\">Accounts Payable (owed to vendors, e.g. companies from which we buy inventory)<\/li>\n<li style=\"font-weight: 400;\">Trade Accounts Payable (another term for Accounts Payable)<\/li>\n<li style=\"font-weight: 400;\">Wages Payable (wages we owe to our employees for work they\u2019ve done but for which they haven\u2019t been paid yet)<\/li>\n<li style=\"font-weight: 400;\">Taxes Payable (taxes we owe that we haven\u2019t paid yet)<\/li>\n<li style=\"font-weight: 400;\">Short-term loans (like lines of credit that are paid back monthly)<\/li>\n<li style=\"font-weight: 400;\">Current Portion of Long-Term Debt (the principal balance on long-term debt that is due within the next twelve months)<\/li>\n<\/ul>\n<h3>Noncurrent Liabilities<\/h3>\n<p>Here are some common noncurrent liabilities:<\/p>\n<ul>\n<li style=\"font-weight: 400;\">Notes Payable (long term debt, less the Current Portion that is due within the next year)<\/li>\n<li style=\"font-weight: 400;\">Bond Payable (another form of long-term debt)<\/li>\n<li style=\"font-weight: 400;\">Leases Payable (long-term portion only\u2014the current portion is reported as a current liability)<\/li>\n<\/ul>\n<p>In common (non-accounting) usage, a liability is something for which you are responsible. Sometimes that term is also used to indicate a burden, or even an embarrassment, as in, \u201cHe had become a political liability.\u201d However, in accounting, it really just means a debt or something you owe, and it\u2019s always expressed in money.<\/p>\n<p>Check your understanding of liabilities, and then we&#8217;ll move on to define owner\u2019s equity.<\/p>\n<section class=\"textbox tryIt\" aria-label=\"Try It\"><iframe loading=\"lazy\" id=\"ohm25096\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=25096&theme=lumen&iframe_resize_id=ohm25096&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n","protected":false},"author":6,"menu_order":12,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Liabilities\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":55,"module-header":"- Select Header -","content_attributions":[{"type":"original","description":"Liabilities","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/67"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":4,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/67\/revisions"}],"predecessor-version":[{"id":1096,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/67\/revisions\/1096"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/55"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/67\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=67"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=67"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=67"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=67"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}