Liability

 

 

 

A Liability is money that you owe to someone else. Liabilities are broken into two broad categories, Current Liabilities, which are things that are owned and due now and Long Term Liabilities which are things such as loan which are due over a prolonged period. Credit Cards are a typical example of Short Term Liabilities and a truck or other loan which is payable over a number of years would be an example of a Long Term Liability. Payments on loans are divided into two sections, Interest which is an expense and the Principal portion of the payment which is a reduction to your liability. Be sure you understand this as trying to 'expense' a loan or credit card payment will result in an error which the program will catch. It will not allow you to enter an EXPENSE entry for a LIABILITY account.