Business, Legal & Accounting Glossary
A current liability is a liability that must be paid or fulfilled within one year. Examples include current portion of long-term debt, accounts payable, and accumulated expenses. The total is used as the denominator in the current ratio metric.
Debt, loan, trade credit, or other obligation due for payment within one year.
A liability which satisfies any of the following criteria:
In accounting, current liabilities are considered liabilities of the business that are to be settled in cash within the fiscal year.
For example accounts payable for goods, services or supplies that were purchased for use in the operation of the business and payable within a normal period of time would be current liabilities.
Bonds, mortgages and loans that are payable over a term exceeding one year would be fixed liabilities. However the payments due on the long-term loans in the current fiscal year could be considered current liabilities if the amount were material.
The proper classification of liabilities is essential when considering a true picture of an organization’s fiscal health.
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This glossary post was last updated: 4th August, 2021 | 0 Views.