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A Liability is defined as a company’s legal financial debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods and services.

A Liability is a debt owed by a company that requires the entity to give up an economic benefit to settle past transactions or events.

Liabilities can be listed under accounts payable and are credited in the double-entry bookkeeping method of managing accounts.