Liabilities informs the obligations and debts that the company has with third parties. As debts, Liabilities are claims recognized by law. The law gives creditors the right to force the company to pay. In the Balance Sheet, the Liability is on the right side, by pure convention. There is not a particular reason to stay on the right. Liabilities are usually divided into two categories: Current Liabilities: expected to be liquidated within a year or the operating cycle, and the Long-term Liabilities: Liabilities with a future benefit over one year or the operating cycle. Provisions are Liabilities of uncertain value or timing. Contingent Liabilities may or may not become actual Liabilities because they are dependent upon some future event occurring or not occurring. These are the types of Liabilities found on the Balance Sheet. The accounting equation relates Assets, Liabilities, and Owner’s Equity (or Net Worth, depending on the type of entity). Assets equals to Liabilities plus Net Worth. Examples of items of Liabilities are borrowed money from banks, debts with suppliers for goods and services purchased on credit, salaries owed to employess and taxes owed to the government.