Liabilities refer to money owed by one business to another business, organization, or vendor. They can fluctuate daily as you make payments and incur new debts.
A liability is a debt or financial obligation where one business owes money to another business, organization or vendor for a product purchased or service provided. There are two types of liabilities: short-term (also called current) and long-term. To be classified as a short-term, the debt is payable within one calendar year. Long-term liabilities track debt which is expected to take more than one year to pay in full. It is important to keep track of your debts and the debts owed to you.
What Are Liabilities?