Liabilities are financial obligations that a person or business owes to others. They can include loans, credit card debt, and unpaid bills. Essentially, if you borrow money or receive goods and services with the promise to pay later, you have created a liability. Understanding liabilities is crucial for managing finances effectively. In a business context, liabilities are recorded on the balance sheet and can be classified as current or long-term. Current liabilities, like accounts payable and short-term loans, are due within a year, while long-term liabilities, such as mortgages and bonds payable, are due over a longer period. Managing these obligations helps ensure financial stability.