What's the difference between a debt and a liability?

[donald55]

The basic difference between Liability and Debt is that Liability is a wide term which includes all the money or financial obligations which the company owes to the other party, whereas, the debt is the narrow term which arises when the funds are raised by the company via borrowing money from the other party.

Hey, that's well explained!

 

[postman]

Actually, in the cash slow and income statement you can find more information than you could think

Such as?

 

[MufuliraBoy]

As a qualified Accountant I don't think there is any specific difference from a legal perspective. Personally I would consider debts something as more short term and specific such as PAYE/NI and other working capital credits such as short term loans. Liabilities sound more long term to me, vague and more open to subjectivity on estimates e.g. decontaminating factory land after vacating premises or similar. But terms are interchangeable and I have done work on supporting numbers for liabilities that management 'believe' to the 'right' number! Additionally, as well companies will roll up profit in good years into a provision and then release in bad years to enable 'profit smoothing'. This was known as big bath accounting in the olden days and has been banned in successive accounting standards but still exists when dressed up as something else! A balance sheet is an art rather than a science in a lot of regard.

 

[AliForexTalks]

The main difference between liability and debt is that liabilities encompass all of one's financial obligations, while debt is only those obligations associated with outstanding loans. Thus, debt is a subset of liabilities.

 

[Farm Yard Forex]

Way to look at it is specificity. Debt is a liability but so are bills like rent and electricity etc.

 

[Jungletrader]

Debt can be on an assest that's appreciating I think 🤔
Whereas liabilities are monies owed on services already rendered.
Not sure if I'm making sense !