Liabilities are obligations that a company owes to others, such as loans, accounts payable, and taxes owed. Like assets, liabilities are listed on the balance sheet in order of maturity. The liabilities are due within a year are listed first, followed by those due after a year.Current liabilities are liabilities that are due within a year. They include accounts payable, short-term loans, and accrued expenses.Non-current liabilities are liabilities that are due after a year. They include long-term debt, deferred tax liabilities, and pension liabilities.
Equity represents the ownership interest in a company. It is the residual interest in the company's assets after deducting its liabilities. Balance sheet is typically broken down into two main components: common stock and retained earnings.Common stock represents the amount investors have contributed to the company in exchange for ownership shares.Retained earnings are the profits a company has earned but has not distributed to shareholders in the form of dividends.
