What is a Liability Account?
A Liability Account is a ledger account where all the debt transactions or amounts of the business are recorded. The amount in the Liability account is the sum that the business owes to the third parties.
Definition of a Liability Account
A liability account tracks obligations your business owes to others, such as loans, accounts payable, and accrued expenses.
Types of Liabilities:
- Current: Due within a year (e.g., accounts payable)
- Non-Current: Due after a year (e.g., long-term loans)
Why It Matters:
Liability accounts help assess a company’s financial obligations and debt levels.
Our bookkeeping services ensure accurate liability tracking for clients in California and Texas.
FAQs
Are credit cards considered liabilities?
Yes, they are short-term liabilities.
Where do liabilities appear?
On the balance sheet.
Can liabilities be good for business?
Yes, if they fund growth wisely.
How often should liability accounts be reviewed?
Monthly is recommended.
Track liabilities accurately. Get expert bookkeeping.
