current liability

Amount a business owes currently to its creditors and suppliers that falls due within one year from the balance sheet date. They are disclosed in a company's accounts on the balance sheet. Current liabilities are short-term business commitments such as creditors (including employees), bank overdrafts, dividends, tax, and interest, and they normally require a company to convert some its current assets into cash to pay them off.

The five main categories of current liabilities are: accounts payable, (money owed to suppliers or employees); accrued expenses (debts accrued but not yet payable); income tax payable (a specific type of accrued expense, tax owed but not yet due); short-term notes payable (the amount drawn from an arranged line of credit that falls due in the following 12 month period); and long-term debt (the element of long-term debt which falls due in the near term, that is within the following 12 month period). Current liabilities are not to be confused with long-term liabilities such as debt that is not due for over a year.