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<span class="vector-toc-numb">5</span> <span>References</span> </div> </a> <ul id="toc-References-sublist" class="vector-toc-list"> </ul> </li> </ul> </div> </div> </nav> </div> </div> <div class="mw-content-container"> <main id="content" class="mw-body"> <header class="mw-body-header vector-page-titlebar"> <nav aria-label="Contents" class="vector-toc-landmark"> <div id="vector-page-titlebar-toc" class="vector-dropdown vector-page-titlebar-toc vector-button-flush-left" > <input type="checkbox" id="vector-page-titlebar-toc-checkbox" role="button" aria-haspopup="true" data-event-name="ui.dropdown-vector-page-titlebar-toc" class="vector-dropdown-checkbox " aria-label="Toggle the table of contents" > <label id="vector-page-titlebar-toc-label" for="vector-page-titlebar-toc-checkbox" class="vector-dropdown-label cdx-button cdx-button--fake-button cdx-button--fake-button--enabled cdx-button--weight-quiet cdx-button--icon-only " aria-hidden="true" ><span class="vector-icon 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href="https://ar.wikipedia.org/wiki/%D9%85%D8%B7%D9%84%D9%88%D8%A8%D8%A7%D8%AA_(%D9%85%D8%AD%D8%A7%D8%B3%D8%A8%D8%A9_%D9%85%D8%A7%D9%84%D9%8A%D8%A9)" title="مطلوبات (محاسبة مالية) – Arabic" lang="ar" hreflang="ar" data-title="مطلوبات (محاسبة مالية)" data-language-autonym="العربية" data-language-local-name="Arabic" class="interlanguage-link-target"><span>العربية</span></a></li><li class="interlanguage-link interwiki-de mw-list-item"><a href="https://de.wikipedia.org/wiki/Verbindlichkeit" title="Verbindlichkeit – German" lang="de" hreflang="de" data-title="Verbindlichkeit" data-language-autonym="Deutsch" data-language-local-name="German" class="interlanguage-link-target"><span>Deutsch</span></a></li><li class="interlanguage-link interwiki-id mw-list-item"><a href="https://id.wikipedia.org/wiki/Liabilitas" title="Liabilitas – Indonesian" lang="id" hreflang="id" data-title="Liabilitas" data-language-autonym="Bahasa Indonesia" data-language-local-name="Indonesian" class="interlanguage-link-target"><span>Bahasa Indonesia</span></a></li><li class="interlanguage-link interwiki-ru badge-Q70894304 mw-list-item" title=""><a href="https://ru.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%BE%D0%B2%D0%BE%D0%B5_%D0%BE%D0%B1%D1%8F%D0%B7%D0%B0%D1%82%D0%B5%D0%BB%D1%8C%D1%81%D1%82%D0%B2%D0%BE" title="Финансовое обязательство – Russian" lang="ru" hreflang="ru" data-title="Финансовое обязательство" data-language-autonym="Русский" data-language-local-name="Russian" class="interlanguage-link-target"><span>Русский</span></a></li><li class="interlanguage-link interwiki-tr mw-list-item"><a href="https://tr.wikipedia.org/wiki/M%C3%BCkellefiyet" title="Mükellefiyet – Turkish" lang="tr" hreflang="tr" data-title="Mükellefiyet" data-language-autonym="Türkçe" data-language-local-name="Turkish" class="interlanguage-link-target"><span>Türkçe</span></a></li><li class="interlanguage-link interwiki-uk mw-list-item"><a href="https://uk.wikipedia.org/wiki/%D0%97%D0%BE%D0%B1%D0%BE%D0%B2%27%D1%8F%D0%B7%D0%B0%D0%BD%D0%BD%D1%8F_(%D0%B1%D1%83%D1%85%D0%B3%D0%B0%D0%BB%D1%82%D0%B5%D1%80%D1%81%D1%8C%D0%BA%D0%B8%D0%B9_%D0%BE%D0%B1%D0%BB%D1%96%D0%BA)" title="Зобов'язання (бухгалтерський облік) – Ukrainian" lang="uk" hreflang="uk" data-title="Зобов'язання (бухгалтерський облік)" data-language-autonym="Українська" data-language-local-name="Ukrainian" class="interlanguage-link-target"><span>Українська</span></a></li><li class="interlanguage-link interwiki-vi mw-list-item"><a href="https://vi.wikipedia.org/wiki/N%E1%BB%A3_ph%E1%BA%A3i_tr%E1%BA%A3" title="Nợ phải trả – Vietnamese" lang="vi" hreflang="vi" data-title="Nợ phải trả" data-language-autonym="Tiếng Việt" data-language-local-name="Vietnamese" class="interlanguage-link-target"><span>Tiếng Việt</span></a></li><li class="interlanguage-link interwiki-zh-yue mw-list-item"><a href="https://zh-yue.wikipedia.org/wiki/%E8%B2%A0%E5%82%B5" title="負債 – Cantonese" 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href="mw-data:TemplateStyles:r1129693374"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><table class="sidebar sidebar-collapse nomobile nowraplinks accounting"><tbody><tr><td class="sidebar-pretitle">Part of <a href="/wiki/Category:Accounting" title="Category:Accounting">a series</a> on</td></tr><tr><th class="sidebar-title-with-pretitle"><a href="/wiki/Accounting" title="Accounting">Accounting</a></th></tr><tr><td class="sidebar-image"><span class="notpageimage" typeof="mw:File"><a href="/wiki/File:Ledger.png" class="mw-file-description" title="Early 19th-century German ledger"><img alt="Early 19th-century German ledger" src="//upload.wikimedia.org/wikipedia/commons/thumb/e/e6/Ledger.png/200px-Ledger.png" decoding="async" width="200" height="105" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/e/e6/Ledger.png/300px-Ledger.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/e/e6/Ledger.png/400px-Ledger.png 2x" data-file-width="1706" data-file-height="896" /></a></span></td></tr><tr><td class="sidebar-above"> <div class="hlist"><ul><li><a href="/wiki/Historical_cost" title="Historical cost">Historical cost</a></li><li><a href="/wiki/Constant_purchasing_power_accounting" title="Constant purchasing power accounting">Constant purchasing power</a></li><li><a href="/wiki/Management_accounting" title="Management accounting">Management</a></li><li><a href="/wiki/Tax_accounting_in_the_United_States" title="Tax accounting in the United States">Tax</a></li></ul></div></td></tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed noborder"><div class="sidebar-list-title" style="color: var(--color-base)">Major types</div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Audit" title="Audit">Audit</a></li><li><a href="/wiki/Budget" title="Budget">Budget</a></li><li><a href="/wiki/Cost_accounting" title="Cost accounting">Cost</a></li><li><a href="/wiki/Forensic_accounting" title="Forensic accounting">Forensic</a></li><li><a href="/wiki/Financial_accounting" title="Financial accounting">Financial</a></li><li><a href="/wiki/Fund_accounting" title="Fund accounting">Fund</a></li><li><a href="/wiki/Governmental_accounting" title="Governmental accounting">Governmental</a></li><li><a href="/wiki/Management_accounting" title="Management accounting">Management</a></li><li><a href="/wiki/Social_accounting" title="Social accounting">Social</a></li><li><a href="/wiki/Tax_accounting" class="mw-redirect" title="Tax accounting">Tax</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)">Key concepts</div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Accounting_period" title="Accounting period">Accounting period</a></li><li><a href="/wiki/Accrual" title="Accrual">Accrual</a></li><li><a href="/wiki/Constant_purchasing_power_accounting" title="Constant purchasing power accounting">Constant purchasing power</a></li><li><a href="/wiki/Economic_entity" title="Economic entity">Economic entity</a></li><li><a href="/wiki/Fair_value" title="Fair value">Fair value</a></li><li><a href="/wiki/Going_concern" title="Going concern">Going concern</a></li><li><a href="/wiki/Historical_cost" title="Historical cost">Historical cost</a></li><li><a href="/wiki/Matching_principle" title="Matching principle">Matching principle</a></li><li><a href="/wiki/Materiality_(auditing)" title="Materiality (auditing)">Materiality</a></li><li><a href="/wiki/Revenue_recognition" title="Revenue recognition">Revenue recognition</a></li><li><a href="/wiki/Unit_of_account" title="Unit of account">Unit of account</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)">Selected accounts</div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Asset" title="Asset">Assets</a></li><li><a href="/wiki/Cash" title="Cash">Cash</a></li><li><a href="/wiki/Cost_of_goods_sold" title="Cost of goods sold">Cost of goods sold</a></li><li><a href="/wiki/Depreciation" title="Depreciation">Depreciation</a> / <a href="/wiki/Amortization_(business)" class="mw-redirect" title="Amortization (business)">Amortization (business)</a></li><li><a href="/wiki/Equity_(finance)" title="Equity (finance)">Equity</a></li><li><a href="/wiki/Expense" title="Expense">Expenses</a></li><li><a href="/wiki/Goodwill_(accounting)" title="Goodwill (accounting)">Goodwill</a></li><li><a class="mw-selflink selflink">Liabilities</a></li><li><a href="/wiki/Profit_(accounting)" title="Profit (accounting)">Profit</a></li><li><a href="/wiki/Revenue" title="Revenue">Revenue</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)"><a href="/wiki/Accounting_standard" title="Accounting standard">Accounting standards</a></div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Generally_accepted_accounting_principles" class="mw-redirect" title="Generally accepted accounting principles">Generally-accepted principles</a></li><li><a href="/wiki/Generally_accepted_auditing_standards" class="mw-redirect" title="Generally accepted auditing standards">Generally-accepted auditing standards</a></li><li><a href="/wiki/Convergence_of_accounting_standards" title="Convergence of accounting standards">Convergence</a></li><li><a href="/wiki/International_Financial_Reporting_Standards" title="International Financial Reporting Standards">International Financial Reporting Standards</a></li><li><a href="/wiki/International_Standards_on_Auditing" title="International Standards on Auditing">International Standards on Auditing</a></li><li><a href="/wiki/Management_Accounting_Principles" class="mw-redirect" title="Management Accounting Principles">Management Accounting Principles</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)"><a href="/wiki/Financial_statement" title="Financial statement">Financial statements</a></div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Annual_report" title="Annual report">Annual report</a></li><li><a href="/wiki/Balance_sheet" title="Balance sheet">Balance sheet</a></li><li><a href="/wiki/Cash_flow_statement" title="Cash flow statement">Cash-flow</a></li><li><a href="/wiki/Statement_of_changes_in_equity" title="Statement of changes in equity">Equity</a></li><li><a href="/wiki/Income_statement" title="Income statement">Income</a></li><li><a href="/wiki/Management_discussion_and_analysis" class="mw-redirect" title="Management discussion and analysis">Management discussion</a></li><li><a href="/wiki/Notes_to_the_financial_statements" class="mw-redirect" title="Notes to the financial statements">Notes to the financial statements</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)"><a href="/wiki/Bookkeeping" title="Bookkeeping">Bookkeeping</a></div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Bank_reconciliation" title="Bank reconciliation">Bank reconciliation</a></li><li><a href="/wiki/Debits_and_credits" title="Debits and credits">Debits and credits</a></li><li><a href="/wiki/Double-entry_bookkeeping_system" class="mw-redirect" title="Double-entry bookkeeping system">Double-entry system</a></li><li><a href="/wiki/FIFO_and_LIFO_accounting" title="FIFO and LIFO accounting">FIFO and LIFO</a></li><li><a href="/wiki/General_journal" title="General journal">Journal</a></li><li><a href="/wiki/Ledger" title="Ledger">Ledger</a> / <a href="/wiki/General_ledger" title="General ledger">General ledger</a></li><li><a href="/wiki/Trial_balance" title="Trial balance">Trial balance</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)"><a href="/wiki/Audit" title="Audit">Auditing</a></div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Financial_audit" title="Financial audit">Financial</a></li><li><a href="/wiki/Internal_audit" title="Internal audit">Internal</a></li><li><a href="/wiki/Accounting_networks_and_associations" class="mw-redirect" title="Accounting networks and associations">Firms</a></li><li><a href="/wiki/Auditor%27s_report" title="Auditor's report">Report</a></li><li><a href="/wiki/Sarbanes%E2%80%93Oxley_Act" title="Sarbanes–Oxley Act">Sarbanes–Oxley Act</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)">People and organizations</div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Accountant" title="Accountant">Accountants</a></li><li><a href="/wiki/Category:Accounting_organizations" title="Category:Accounting organizations">Accounting organizations</a></li><li><a href="/wiki/Luca_Pacioli" title="Luca Pacioli">Luca Pacioli</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)">Development</div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/History_of_accounting" title="History of accounting">History</a></li><li><a href="/wiki/Accounting_research" title="Accounting research">Research</a></li><li><a href="/wiki/Positive_accounting" title="Positive accounting">Positive accounting</a></li><li><a href="/wiki/Sarbanes%E2%80%93Oxley_Act" title="Sarbanes–Oxley Act">Sarbanes–Oxley Act</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="color: var(--color-base)">Misconduct</div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"><ul><li><a href="/wiki/Creative_accounting" title="Creative accounting">Creative</a></li><li><a href="/wiki/Earnings_management" title="Earnings management">Earnings management</a></li><li><a href="/wiki/Error_account" title="Error account">Error account</a></li><li><a href="/wiki/Hollywood_accounting" title="Hollywood accounting">Hollywood</a></li><li><a href="/wiki/Off-balance-sheet" title="Off-balance-sheet">Off-balance-sheet</a></li><li><a href="/wiki/Two_sets_of_books" title="Two sets of books">Two sets of books</a></li></ul></div></div></div></td> </tr><tr><td class="sidebar-navbar"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><style data-mw-deduplicate="TemplateStyles:r1239400231">.mw-parser-output .navbar{display:inline;font-size:88%;font-weight:normal}.mw-parser-output .navbar-collapse{float:left;text-align:left}.mw-parser-output .navbar-boxtext{word-spacing:0}.mw-parser-output .navbar ul{display:inline-block;white-space:nowrap;line-height:inherit}.mw-parser-output .navbar-brackets::before{margin-right:-0.125em;content:"[ "}.mw-parser-output .navbar-brackets::after{margin-left:-0.125em;content:" ]"}.mw-parser-output .navbar li{word-spacing:-0.125em}.mw-parser-output .navbar a>span,.mw-parser-output .navbar a>abbr{text-decoration:inherit}.mw-parser-output .navbar-mini abbr{font-variant:small-caps;border-bottom:none;text-decoration:none;cursor:inherit}.mw-parser-output .navbar-ct-full{font-size:114%;margin:0 7em}.mw-parser-output .navbar-ct-mini{font-size:114%;margin:0 4em}html.skin-theme-clientpref-night .mw-parser-output .navbar li a abbr{color:var(--color-base)!important}@media(prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .navbar li a abbr{color:var(--color-base)!important}}@media print{.mw-parser-output .navbar{display:none!important}}</style><div class="navbar plainlinks hlist navbar-mini"><ul><li class="nv-view"><a href="/wiki/Template:Accounting" title="Template:Accounting"><abbr title="View this template">v</abbr></a></li><li class="nv-talk"><a href="/wiki/Template_talk:Accounting" title="Template talk:Accounting"><abbr title="Discuss this template">t</abbr></a></li><li class="nv-edit"><a href="/wiki/Special:EditPage/Template:Accounting" title="Special:EditPage/Template:Accounting"><abbr title="Edit this template">e</abbr></a></li></ul></div></td></tr></tbody></table> <p>In <a href="/wiki/Financial_accounting" title="Financial accounting">financial accounting</a>, a <b>liability</b> is a quantity of value that a financial entity owes. More technically, it is value that an entity is expected to deliver in the future to satisfy a present obligation arising from past events.<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> The value delivered to settle a liability may be in the form of <a href="/wiki/Asset" title="Asset">assets</a> transferred or services performed. </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="Characteristics">Characteristics</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Liability_(financial_accounting)&action=edit&section=1" title="Edit section: Characteristics"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A liability is defined by the following characteristics: </p> <ul><li>Any type of borrowing from persons or banks for improving a business or personal income that is payable during short or long time;</li> <li>A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit, at a specified or determinable date, on occurrence of a specified event, or on demand;</li> <li>A duty or responsibility that obligates the entity to another, leaving it little or no discretion to avoid settlement; and,</li> <li>A transaction or event obligating the entity that has already occurred</li></ul> <p>Liabilities in financial accounting need not be legally enforceable; but can be based on equitable obligations or constructive obligations. An <b>equitable obligation</b> is a duty based on ethical or moral considerations. A <b>constructive obligation</b> is an obligation that is implied by a set of circumstances in a particular situation, as opposed to a contractually based obligation. </p><p>The <a href="/wiki/Accounting_equation" title="Accounting equation">accounting equation</a> relates <a href="/wiki/Asset" title="Asset">assets</a>, liabilities, and <a href="/wiki/Ownership_equity" class="mw-redirect" title="Ownership equity">owner's equity</a>: </p> <dl><dd><b>Assets = Liabilities + Owner's Equity</b></dd></dl> <p>The accounting equation is the mathematical structure of the <a href="/wiki/Balance_sheet" title="Balance sheet">balance sheet</a>. </p><p>Probably the most accepted accounting definition of liability is the one used by the <a href="/wiki/International_Accounting_Standards_Board" title="International Accounting Standards Board">International Accounting Standards Board</a> (IASB). The following is a quotation from IFRS Framework: </p> <style data-mw-deduplicate="TemplateStyles:r1244412712">.mw-parser-output .templatequote{overflow:hidden;margin:1em 0;padding:0 32px}.mw-parser-output .templatequotecite{line-height:1.5em;text-align:left;margin-top:0}@media(min-width:500px){.mw-parser-output .templatequotecite{padding-left:1.6em}}</style><blockquote class="templatequote"><p>A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits</p><div class="templatequotecite">— <cite>F.49(b)</cite></div></blockquote> <p>Regulations as to the recognition of liabilities are different all over the world, but are roughly similar to those of the IASB. </p><p>Examples of types of liabilities include: money owing on a loan, money owing on a mortgage, or an <a href="/wiki/IOU" title="IOU">IOU</a>. </p> <figure class="mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:VerbindlichkeitenSektorenUSAengl.PNG" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/f/f5/VerbindlichkeitenSektorenUSAengl.PNG/250px-VerbindlichkeitenSektorenUSAengl.PNG" decoding="async" width="250" height="177" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/f/f5/VerbindlichkeitenSektorenUSAengl.PNG/375px-VerbindlichkeitenSektorenUSAengl.PNG 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/f/f5/VerbindlichkeitenSektorenUSAengl.PNG/500px-VerbindlichkeitenSektorenUSAengl.PNG 2x" data-file-width="1754" data-file-height="1239" /></a><figcaption>Liabilities of sectors of USA economy, 1945-2017, based on <a href="/wiki/Flow_of_funds" title="Flow of funds">flow of funds</a> statistics of the <a href="/wiki/Federal_Reserve_System" class="mw-redirect" title="Federal Reserve System">Federal Reserve System</a></figcaption></figure> <p><b>Liabilities</b> are debts and obligations of the business they represent as <b>creditor's claim</b> on business assets. </p> <div class="mw-heading mw-heading2"><h2 id="Classification">Classification</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Liability_(financial_accounting)&action=edit&section=2" title="Edit section: Classification"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Liabilities are reported on a <a href="/wiki/Balance_sheet" title="Balance sheet">balance sheet</a> and are usually divided into two categories: </p> <ul><li><a href="/wiki/Current_liabilities" class="mw-redirect" title="Current liabilities">Current liabilities</a> – these liabilities are reasonably expected to be liquidated within a year. They usually include payables such as <a href="/wiki/Wage" title="Wage">wages</a>, <a href="/wiki/Account_(accountancy)" class="mw-redirect" title="Account (accountancy)">accounts</a>, <a href="/wiki/Tax" title="Tax">taxes</a>, and <a href="/wiki/Accounts_payable" title="Accounts payable">accounts payable</a>, unearned revenue when <a href="/wiki/Adjusting_entries" title="Adjusting entries">adjusting entries</a>, portions of long-term bonds to be paid this year, and short-term obligations (<i>e.g.</i> from purchase of equipment). Current liabilities are obligations whose liquidation is reasonably expected to require the use of current assets, the creation of other current liabilities, or the provision of services within the next year or operating cycle, whichever is longer.</li> <li><a href="/wiki/Long-term_liabilities" title="Long-term liabilities">Long-term liabilities</a> – these liabilities are reasonably expected <i>not</i> to be liquidated within a year. They usually include issued long-term <a href="/wiki/Bond_(finance)" title="Bond (finance)">bonds</a>, notes payable, long-term <a href="/wiki/Lease" title="Lease">leases</a>, <a href="/wiki/Pension" title="Pension">pension</a> obligations, and long-term product <a href="/wiki/Warranty" title="Warranty">warranties</a>.</li></ul> <p>Liabilities of uncertain value or timing are called provisions. </p><p>When a company <a href="/wiki/Deposit_account" title="Deposit account">deposits</a> cash with a <a href="/wiki/Bank" title="Bank">bank</a>, the bank records a liability on its balance sheet, representing the obligation to repay the depositor, usually <a href="https://en.wiktionary.org/wiki/on_demand" class="extiw" title="wikt:on demand">on demand</a>. Simultaneously, in accordance with the <a href="/wiki/Double-entry" class="mw-redirect" title="Double-entry">double-entry</a> principle, the bank records the cash, itself, as an asset. The company, on the other hand, upon depositing the cash with the bank, records a decrease in its cash and a corresponding increase in its bank deposits (an asset). </p> <div class="mw-heading mw-heading2"><h2 id="Debits_and_credits">Debits and credits</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Liability_(financial_accounting)&action=edit&section=3" title="Edit section: Debits and credits"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A <a href="/wiki/Debit" class="mw-redirect" title="Debit">debit</a> either increases an asset or decreases a liability; a <a href="/wiki/Debits_and_credits" title="Debits and credits">credit</a> either decreases an asset or increases a liability. According to the principle of <a href="/wiki/Double-entry" class="mw-redirect" title="Double-entry">double-entry</a>, every financial transaction corresponds to both a debit and a credit. </p><p>When cash is deposited in a bank, the bank is said to "debit" its cash account, on the asset side, and "credit" its deposits account, on the liabilities side. In this case, the bank is debiting an asset and crediting a liability, which means that both increase. </p><p>When cash is withdrawn from a bank, the opposite happens: the bank "credits" its cash account and "debits" its deposits account. In this case, the bank is crediting an asset and debiting a liability, which means that both decrease. </p><p><br /> </p> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Liability_(financial_accounting)&action=edit&section=4" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><a href="/wiki/Assets" class="mw-redirect" title="Assets">Assets</a></li> <li><a href="/wiki/Cost" title="Cost">Cost</a></li> <li><a href="/wiki/Contingent_liability" title="Contingent liability">Contingent liability</a></li> <li><a href="/wiki/Depreciation" title="Depreciation">Depreciation</a></li> <li><a href="/wiki/Financial_Accounting" class="mw-redirect" title="Financial Accounting">Financial Accounting</a></li> <li><a href="/wiki/Overhead_(business)" title="Overhead (business)">Overhead (business)</a></li></ul> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Liability_(financial_accounting)&action=edit&section=5" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1235681985">.mw-parser-output .side-box{margin:4px 0;box-sizing:border-box;border:1px solid #aaa;font-size:88%;line-height:1.25em;background-color:var(--background-color-interactive-subtle,#f8f9fa);display:flow-root}.mw-parser-output .side-box-abovebelow,.mw-parser-output .side-box-text{padding:0.25em 0.9em}.mw-parser-output .side-box-image{padding:2px 0 2px 0.9em;text-align:center}.mw-parser-output .side-box-imageright{padding:2px 0.9em 2px 0;text-align:center}@media(min-width:500px){.mw-parser-output .side-box-flex{display:flex;align-items:center}.mw-parser-output .side-box-text{flex:1;min-width:0}}@media(min-width:720px){.mw-parser-output .side-box{width:238px}.mw-parser-output .side-box-right{clear:right;float:right;margin-left:1em}.mw-parser-output .side-box-left{margin-right:1em}}</style><div class="side-box metadata side-box-right"><style data-mw-deduplicate="TemplateStyles:r1126788409">.mw-parser-output .plainlist ol,.mw-parser-output .plainlist ul{line-height:inherit;list-style:none;margin:0;padding:0}.mw-parser-output .plainlist ol li,.mw-parser-output .plainlist ul li{margin-bottom:0}</style> <div class="side-box-abovebelow"> <a href="/wiki/Wikipedia:The_Wikipedia_Library" title="Wikipedia:The Wikipedia Library">Library resources</a> about <br /> <b>Liability financial accounting</b> <hr /></div> <div class="side-box-flex"> <div class="side-box-text plainlist"><ul><li><a class="external text" href="https://ftl.toolforge.org/cgi-bin/ftl?st=wp&su=Liability+%28financial+accounting%29">Resources in your library</a></li> </ul></div></div> 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class="references"> <li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon 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.citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite id="CITEREFHussey2011" class="citation book cs1">Hussey, Roger (2011). <i>Fundamentals of International Financial Accounting</i>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=Fundamentals+of+International+Financial+Accounting&rft.date=2011&rft.aulast=Hussey&rft.aufirst=Roger&rfr_id=info%3Asid%2Fen.wikipedia.org%3ALiability+%28financial+accounting%29" class="Z3988"></span></span> </li> </ol></div></div>    </div><noscript><img src="https://login.wikimedia.org/wiki/Special:CentralAutoLogin/start?type=1x1" alt="" width="1" height="1" style="border: none; position: absolute;"></noscript> <div class="printfooter" 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