Anything that is owed to others is a liability.  Liabilities are often referred to as “payables”.

Liabilities are generally separated into two groups:

Current Liabilities

Debts to others that are due in a short period of time and are paid with current assets.

Long-term Liabilities

Debts that are “fixed” or paid over a long period of time, often for plant assets.

Common Liability Accounts:

Current Liabilities:

• Notes Payable – Promissory notes to creditors.

• Accounts Payable – What you owe others on account.

• Unearned Revenue – You’ve been paid, but haven’t delivered.

• Salaries Payable – Salaries you owe employees.

• Interest Payable – Interest you owe.

• Taxes Payable – Taxes you owe.

Long-Term Liabilities:

Liabilities that are carried over a number of years or at least more than one accounting cycle.  Examples of long-term liabilities are mortgages payable, bonds payable, and long-term notes.