Current Liabilities Definition

Current Liabilities are financial obligations or debts that are due to be paid within one year.

Current Liabilities is a term referring to any financial obligations or debts due to be paid within the next 12 months, these will not however include any long term-debt that is being paid off within the current period. Found on the balance sheet, current liabilities act in opposite of current assets, which are typically used to pay them off.

The current Liabilities of a company will usually total the following items;
Accounts Payable
Dividends Payable
Short Term Debt
Accrued Expenses
Income Taxes Payable
Wages
Accrued Interest

The amount of Current Liabilities provides an overview of a company's short term financial standing. To meet these financial obligations company's will use their current assets and so the ratio between these two items is of great importance. It is ideal the amount of current assets exceed that of the current liabilities as a means of liquidity for these short term obligations.

You may also be interested in: