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.
