Liability

What is Liability?

Liability is an obligation or debt that a business owes to external parties, representing claims against the company's assets. Liabilities are classified as Current Liabilities (payable within one year) like accounts payable, short-term loans, or Long-term Liabilities like mortgages and bonds. On the balance sheet, liabilities plus equity equal total assets. In Tally, liabilities are tracked through ledgers and displayed on the balance sheet.