Current Liabilities

Current liabilities correspond to accounts that can be made within the company’s fiscal year, this 12-month period from the income statement. Also known as  short-term liabilities  .

Current liability obligations must be  settled using current assets  , which are the group of assets resulting from the business operation, such as accounts receivable from customers.

Loans for the acquisition of rights over non-current assets are included in current liabilities, provided that the amounts to be paid are due in the following year.

Examples of current liabilities

Included as subaccounts of the company’s current liabilities:

  • Salaries, vacations, provisions and other rights and participation related to employees.
  • Taxes
  • Providers
  • Rent
  • Banks and financial institutions.
  • Credits from partners and shareholders

Current and non-current liabilities

Liability is a taxable obligation. Paying is understood as past transactions and claimed at a future date from the company, such as installment purchases. It constitutes the balance sheet of the company, and once the difference is made in relation to the assets, it corresponds to the equity of the company.

Current liabilities are those payable in the short term. In accounting, these accounts are said to be settled in the following fiscal year, up to one year after the balance sheet.

In the event that the liability is settled after the next fiscal year, or if the cycle of operations is longer than one year, this is part of the  non-current liability  and is called  a long-term liability.

Current operating liabilities and current financial liabilities

The two terms are not provided for in the legislation, but are used in accounting management to calculate the need for working capital.

Current operating liabilities are those directly related to the operation of the company: payment of employees, suppliers, taxes, etc.

Current financial liabilities are monetary values, such as business bills and short-term loans.

It is recommended that each type of current liability be paid with its corresponding current asset. For example, these loans should be paid with the results of financial investments and not with accounts receivable from customers, which should be assigned to operating accounts such as employee pay.

The need for working capital is calculated by the difference between current operating assets and current operating liabilities.