Liabilities

Liabilities are the second element of the accounting equation and can be defined as anything that has a future obligation.

For example, if you get a loan for the bank for $200,000. You now have an obligation to pay that back to the bank (unfortunately!). That is a liability.
However, the bank fees on that loan – they are an expense as there is no future obligation based on paying bank fees. They have arisen because you took out the loan but like in assets there is only an indirect link.

You need to ask yourself – is there a direct future obligation from this cost? While there may be an indirect one in with the bank fees, there is no direct one.

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