What is a liability in business?

What is a Liability? A liability is an obligation of a company that results in the company’s future sacrifices of economic benefits to other entities or businesses. A liability, like debt, can be an alternative to equity as a source of a company’s financing.

What is the plural of liabilities?

noun, plural li·a·bil·i·ties. Finance. moneys owed; debts or pecuniary obligations (opposed to assets ). Accounting. liabilities as detailed on a balance sheet, especially in relation to assets and capital. something disadvantageous: His lack of education is his biggest liability. Also li·a·ble·ness [lahy-uh-buhl-nis]. /ˈlaɪ ə bəl nɪs/.

Is a liability a bad thing?

A liability is something that is borrowed from, owed to, or obligated to someone else. It can be real (e.g. a bill that needs to be paid) or potential (e.g. a possible lawsuit). A liability is not necessarily a bad thing. For instance, a company may take out debt (a liability) in order to expand and grow its business.