Categories: General Tax Terms
Current Liability
A current liability is a financial obligation that a company is required to settle within one year or within its operating cycle, whichever is longer. Current liabilities are typically settled using current assets, which include cash or other assets that are expected to be converted into cash within the same timeframe.
Examples of current liabilities include accounts payable, short-term loans, accrued expenses, and other obligations that are due within the upcoming fiscal year. These liabilities are reported on a company’s balance sheet and are crucial for assessing its short-term financial health and liquidity.
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