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Liabilities: meaning, definitions and examples

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liabilities

 

[ˌlaɪəˈbɪlɪtiz ]

Definition

Context #1 | Noun

financial accounting

Liabilities are debts or obligations that a company owes to outside parties. These can include loans, accounts payable, accrued expenses, bonds, and other financial obligations.

Synonyms

debts, indebtedness, obligations.

Which Synonym Should You Choose?

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Word Description / Examples
liabilities

Used in formal financial and legal contexts to refer to all the amounts a company or person owes that must be paid.

  • The company's liabilities exceeded its assets.
  • We need to account for all liabilities in our financial statement.
debts

Refers to specific amounts of money that are owed or due from one party to another.

  • He couldn't sleep because of his mounting debts.
  • Paying off student debts can take many years.
obligations

Refers to duties or commitments, often financial, that someone is bound to fulfill.

  • She felt a strong obligation to support her family.
  • The loan comes with certain obligations you must meet.
indebtedness

Typically used in formal and legal contexts to discuss the state of being in debt, often significant in amount.

  • The company's high level of indebtedness is a cause for concern.
  • Indebtedness has become a major issue for the government.

Examples of usage

  • Companies must carefully manage their liabilities to ensure they can meet their financial obligations.
  • Long-term liabilities are debts that are due beyond one year.
  • Accounts payable is a common type of liability found on a company's balance sheet.

Interesting Facts

Etymology

  • The term originates from the Latin word 'liabilitas', which means 'obligation or responsibility'.
  • In the 14th century, the word began to be used in English to describe the quality of being liable or responsible.
  • Liabilities are now a standard term in finance and accounting, encompassing loans, debts, and other financial obligations.

Finance

  • In accounting, liabilities are divided into current (due within a year) and long-term (due in more than a year).
  • The balance sheet of a company lists its liabilities alongside assets, showing the financial health of the business.
  • Common examples include loans, credit card debt, and unpaid bills, representing what a company needs to repay.

Legal Perspective

  • In law, a liability can arise from a contract, tort, or statute, holding a party responsible for their actions or inactions.
  • Liability insurance protects against claims resulting from injuries and damage to people or property.
  • Different jurisdictions may have varying laws that define or limit liabilities, emphasizing the importance of local legal systems.

Business Concepts

  • Startups often face high liabilities as they generally need to borrow money to fund initial growth.
  • Understanding liabilities is crucial for investors assessing a company's risks and overall value.
  • Managing liabilities efficiently is a critical skill for business owners, impacting long-term sustainability and profitability.

Psychology

  • The concept of personal liability can affect mental well-being, as owing money can lead to stress and anxiety.
  • Some studies suggest that people with high personal debt may experience changes in decision-making and risk assessment.
  • Perceptions of liability often differ culturally; some societies stigmatize debt while others view it as a part of business growth.

Translations

Translations of the word "liabilities" in other languages:

🇵🇹 responsabilidades

🇮🇳 दायित्व

🇩🇪 Verbindlichkeiten

🇮🇩 kewajiban

🇺🇦 зобов'язання

🇵🇱 zobowiązania

🇯🇵 負債

🇫🇷 passifs

🇪🇸 responsabilidades

🇹🇷 yükümlülükler

🇰🇷 부채

🇸🇦 الالتزامات

🇨🇿 závazky

🇸🇰 záväzky

🇨🇳 负债

🇸🇮 obveznosti

🇮🇸 skuldir

🇰🇿 міндеттемелер

🇬🇪 ვალდებულებები

🇦🇿 öhdəliklər

🇲🇽 responsabilidades

Word Frequency Rank

Ranking #3,939, this word is part of upper-intermediate vocabulary. While not among the most basic terms, it appears often enough to be valuable for advanced communication.