What is a liability?

 WHAT IS A LIABILITY?

Liabilities are things that are owed by the business which are the obligations or debts of the business. These could be classed as:

·         Non-Current liabilities

·         Current liabilities

 

Non-Current liabilities are obligations that are owed by the business over a long period of time usually for longer than one year and these are also called long-term liabilities Examples include:

·         Long-term loans

·         Long-term credit facility arrangements

·         Long-term bond payable arrangements

 

Current liabilities are things that are owed by the business over a short period of time usually for shorter than one year and these are also called short-term liabilities. Examples include:

·         Creditors

·         Short-term debts

·         Accrued expenses

 

Your task:

Identify 3 differences between current and non-current liabilities