LIABILITY

12 May 2016 By PDSNET

An accounting term, which records monies owed by the company to outsiders. The most common forms of liabilities are share capital and reserves (which are money "owed" to the shareholders), long-term loans such as debentures, and short-term loans (normally called creditors). These amounts are added to the liabilities side of the balance side. They are credit balances in the ledger, and essentially they show the source of the company's finance.



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