Liability
🏦 Banking
Quick Definition
A liability is a financial obligation or debt that an individual or entity owes, which must be settled in the future.
Examples
- 1A mortgage on a house, which is a long-term financial commitment to pay back the borrowed amount.
- 2Credit card balances, where the cardholder owes money to the credit card company.
- 3A car loan, which requires monthly payments until the full amount is repaid.
- 4Unpaid utility bills, which are obligations that must be settled to continue receiving services.
Tags
liabilitydebtfinanceaccountingfinancial-obligations
Related Terms
Other terms you might find helpful
Asset
An asset is any resource owned by an individual or entity that is expected to provide future economic benefits.
Balance Sheet
A balance sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.
Equity
Equity represents ownership value in an asset or a company, typically expressed as the difference between the asset's value and the liabilities associated with it.
Quick Info
Category:Banking
Difficulty:basic
Last Updated:6/19/2025