Liabilities

Liabilities are obligations that a firm still owes.

PRO TIP: If an account has "Payable" next to it, it's probably a liability. Just don't forget about Unearned Revenue!

There are two types of liabilities you need to know:

Short term liabilities are those debts that your company expects to pay off within 1 year.

Account	In relation to a lemonade stand...
Accounts Payable	You paid for a new pitcher on credit, promising to pay the store back within a year.
Notes Payable (short-term)	You took a loan out from the bank for a new table, which will be paid back within a year.

Don't get Accounts Payable vs. Notes Payable twisted!

Accounts Payable deal with purchases on credit.

...vs...

Notes Payable deal with loans.

Long term liabilities are those debts that your company expects to be paid in 1+ years.

Account	In relation to a lemonade stand...
Notes Payable (long-term)	You took a loan out from the bank for a new table, which will be paid back in over 1 year.
Mortgage Payable	You bought a building to mass-produce lemonade and need to pay it off over the next 5 years.