Sunday, July 5, 2015

Current Liabilities

Current Liabilities are bills that will come due in the next 12 months. These include the company’s normal operating expenses such as salaries, utilities, and so on. Long-term debt, such as mortgages would not be included, however that portion of payments due in the next 12 months would be included.

Current liabilities are usually presented in the following order:
  1. the principal portion of notes payable that will become due within one year
  2. accounts payable
  3. the remaining current liabilities such as payroll taxes payable, income taxes payable, interest payable and other accrued expenses
The parties who are owed the current liabilities are referred to as creditors. If the creditors have a lien on company assets, they are known as secured creditors. The creditors without a lien are referred to as unsecured creditors.

The amount of current liabilities is used to determine a company's working capital (current assets minus current liabilities) and the company's current ratio.

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