Which Account is not a Liability Account?

By Shivank Goel|Updated : September 6th, 2022

Out of Account payable, Accrued Expenses, Cash, and Notes payable, Cash is not a liability account. As liability is the financial value of an obligation or debt owed by the business to another organisation or individual. Liabilities are not subject to depreciation. a debt that needs to be repaid and would cause a flow of cash.

A Liability Account

Resulting from business transactions, a company records the following in a liability account, which is a general ledger account:

  • Payables to suppliers for products and services purchased on credit
  • Amounts due to banks and other lenders as principal for loans
  • Costs that buyers have prepaid, deposits made by customers, and other amounts that have been incurred but have not yet been processed.
  • Certain business taxes that have been postponed
  • Contingent liabilities that are likely and quantifiable

Examples of Liability Accounts

Common liability accounts used with the accrual method of accounting include:

  • Accounts Payable
  • Notes Payable or Loans Payable
  • Accrued Liabilities or Accrued Expenses
  • Unearned Revenues or Customers' Deposits
  • Deferred Income Taxes

Liabilities are listed on the balance sheet as either current liabilities or noncurrent (or long-term) liabilities. Liabilities are balances that are almost usually credit balances.

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FAQs

  • A liability is a debt that a person or business has, typically in the form of money. Through the transmission of economic benefits like money, products, or services, liabilities are eventually satisfied.

  • Liability accounts are sections of the company's books that display its debt. When a liability account is debited, the amount owed by the company is reduced (i.e., the liability increases), and when a liability account is credited, the amount owed by the company grows (i.e. increases the liability).

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