What is a business liability?

• Current liabilities

• Long-term liabilities

• Contingent liabilities

Current liabilities are also known as short-term liabilities. Essentially, these are any debts or monetary business commitments that a company must pay within a year.

Some examples of current liabilities include accrued expenses, accounts payable, income taxes payable, and short-term loans.

Long-term liabilities can also be referred to as non-current liabilities. These liabilities are any debts or monetary business commitments that are due in over a year's time. Companies may accrue these liabilities to expand their business or acquire new capital to buy capital assets.

Some examples of long-term liabilities are long-term notes payable, bonds payable, mortgage payable, capital leases, and deferred tax liabilities.

Contingent liabilities are different from the previous two in that these are liabilities that might happen. This typically occurs when liability is dependent on the specific outcome of some sort of future business event.

For example, if a company has a potential lawsuit, this is seen as a contingent liability because in the event the lawsuit occurs, it becomes a liability for the company.