Current liabilities are short term debt obligations that a company has to pay within a year. Current assets are used to pay off these liabilities. The amount of total current liabilities, given on the balance sheet, is also used to calculate working capital of a company.
Current liabilities are shown on the liability side on a company’s balance sheet as below:
The excess amount of these liabilities over total current assets indicates the inefficiency of management. Put it simple it shows that management is unable to meet its short term liabilities on time. So, management has to take a good care of the balance between current assets and liabilities.
List of current liabilities:
Below is the detailed list of these liabilities:
- Accounts payable,
- Sales taxes payable,
- Payroll taxes payable,
- Income taxes payable,
- Interest payable,
- Bank account overdrafts,
- Accrued expenses,
- Customer deposits,
- Dividends declared,
- Short-term loans,
- Current maturities of long-term debt etc.
