Current Liabilities Definition – What are Current Liabilities?

Accounting Glossary 

Current liabilities definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Current liabilities can be defined as: Obligations due to be paid or settled within one year or the company’s operating cycle, whichever is longer. Current liabilities are those due in a shorter period of time, a year, current liabilities usually including accounts payable and prepaid expenses. The difficult factor for determining current liabilities often lies with weather a loan should be reported a current liability, long term liability, or both current and long term liability. A loan that has a life over a year but which makes principle payment within a year will have both a long term liability portion and a current liability portion. Current liabilities are often compared to current assets, it being useful to know if we have current assets that can cover current liabilities.