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Long-term liabilities are liabilities with a future benefit of over one year. It refers to company's existing obligations or debts due after one year or operating cycle, whichever is longer. They are shown on the right side of the balance-sheet representing the sources of funds, which are generally used to finance capital assets. Long-term liabilities appear after
total current liabilities and before owners' equity. Examples of long-term liabilities are notes payable, mortgage payable, obligations under long-term capital leases, bonds payable, debentures, pension and other post-employment benefit obligations. The values of many long-term liabilities represent the present value of the anticipated future cash outflows.
Decisions related to long term debt are critical because how a company finances its long term operations plays an important role in company's long term financial viability. Too much debt may make the business risky while too much dependence on equity indicates inefficiency.