Liabilities

Liabilities are defined as the obligations that are owed to others. Balance sheet liabilities are those that are recorded on the balance sheet.

The liabilities section of the balance sheet summarizes debts owed, including personal and business-related debts.

The three most common types of liabilities are debt, equity, and taxes. Debt is when a company borrows money from someone else to pay for an asset or to fund its operations. Equity is when a company uses its cash to buy help from someone else and then sells it later for more than what it paid. Taxes can be either a liability or an investment, depending on how the government treats them and how they affect the company’s financial state.