In accounting, current liabilities are considered liabilities of the business that are due within the fiscal year.
For example accounts payable for goods, services or supplies that were purchased for use in the operation of the business and payable within a normal period of time would be current liabilities.
Bonds, mortages and loans that are payable over a term exceeding one year would be fixed liabilities. However the payments due in the current fiscal year could be considered current liabilities if the amount were material.
The proper classification of liabilities is essential when considering a true picture of an organization's fiscal health.
Currentliabilities are obligations that are due or will become due with one year and will be paid with current assets or replaced with another currentliability.
If the currentliability will be liquidated with a noncurrent asset or refinanced with some form of long-term debt, the currentliability should be reclassed and reported as a long-term rather than a current obligation as current assets will not be used for its payment.
Current assets and liability data are used to analyze the institution's financial operations to determine where the news is good or bad.
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