Liability
In one sentenceA present obligation of the business arising from past events, the settlement of which is expected to result in an outflow of resources, such as amounts owed to suppliers and loans.
Simply put
A liability is what you “owe” others: the price of goods bought on credit, a bank loan, the month's salaries not yet paid, or tax due to ZATCA.
It is divided into current, settled within a year, and long-term. A liability increases with a credit and decreases with a debit.
Worked example
A contracting business at year-end.
Bank loan200,000 SAR
Amounts owed to suppliers80,000 SAR
Unpaid December salaries20,000 SAR
Total liabilities (200,000 + 80,000 + 20,000)300,000 SAR
Don't confuse it with
EquityIt is the owners' claim on the business, and it is not due on a set date the way a liability is.