{"id":2616,"date":"2020-08-25T22:22:51","date_gmt":"2020-08-25T22:22:51","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=2616"},"modified":"2020-11-22T22:18:56","modified_gmt":"2020-11-22T22:18:56","slug":"liabilities","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/liabilities\/","title":{"raw":"Liabilities","rendered":"Liabilities"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Define liabilities<\/li>\r\n<\/ul>\r\n<\/div>\r\n<strong>Liability<\/strong> is the accounting term for debt. Like assets, liabilities are categorized as current and noncurrent.\r\n<p style=\"padding-left: 30px\">[latex]\\text{Liabilities}=\\text{Debt}[\/latex]<\/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<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23335\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Define liabilities<\/li>\n<\/ul>\n<\/div>\n<p><strong>Liability<\/strong> is the accounting term for debt. Like assets, liabilities are categorized as current and noncurrent.<\/p>\n<p style=\"padding-left: 30px\">[latex]\\text{Liabilities}=\\text{Debt}[\/latex]<\/p>\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<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23335\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23335&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23335\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-2616\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Liabilities. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":17,"menu_order":13,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Liabilities\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-2616","chapter","type-chapter","status-publish","hentry"],"part":3,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/2616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":11,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/2616\/revisions"}],"predecessor-version":[{"id":6493,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/2616\/revisions\/6493"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/3"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/2616\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/media?parent=2616"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=2616"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/contributor?post=2616"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/license?post=2616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}