The total amount of liabilities (financial obligations) that an entity owes to others (i.e., all money owed to creditors). This constitutes an entity’s obligations arising from past transactions or events which are expected, once settled, to reduce its assets.
Total liabilities are the sum of all the values of liabilities presented on an entity’s balance sheet. Total liabilities (TLs) can be defined as the sum of all short-term liabilities, long-term liabilities, and other liabilities. They may consist of items such as payables (accounts payable), debt payable, customer deposits, items payable (salaries payable, taxes payable, interest payable, sales tax payable, etc.)
On the balance sheet, the sum of an entity’s total liabilities and equity must equal its total assets (see: accounting equation).
