What is an example of a fixed liability?

A fixed liability refers to a financial obligation or debt that a company is required to pay over a long period. Mortgages, particularly on real estate, are classic examples of fixed liabilities because they involve a commitment to regular payments over several years, typically associated with property ownership.

In this context, the mortgage on a company’s building represents a significant long-term financial responsibility that does not fluctuate month-to-month but remains constant until paid off. This long-term aspect is what categorizes it distinctly as a fixed liability.

Other options generally represent variable costs or short-term obligations and do not fit the definition of fixed liabilities. For instance, an electric bill is a utility expense that fluctuates month to month. An invoice for a lumber package typically pertains to short-term payables associated with purchasing materials. The mention of a troublesome relative is not a financial liability at all, making it irrelevant in this context. Therefore, the mortgage is distinct and clearly aligns with the characteristics of fixed liabilities.