Liabilities

Liabilities are financial obligations or debts that a person or organization owes to others. They represent future sacrifices of economic benefits, typically arising from past transactions or events. Common examples include loans, mortgages, credit card debt, and unpaid bills. In accounting, liabilities are classified as current (due within a year) or long-term (due in more than a year) and are a key part of a company's balance sheet, showing how much is owed compared to assets. Understanding liabilities helps assess financial health and liquidity, indicating the ability to meet obligations as they become due.