Current Liabilities
Generally, current liabilities are all debts that have a maturity of less than one year. Most of the current liabilities for the average company are tied to trade credit extended by suppliers (accounts payable). These liabilities will be paid as the inventories are sold and converted to cash.
Accrued expenses represent costs that have been incurred but not yet paid. This account may include items such as rent, interest, or salaries.
Income taxes payable are simply that, and notes payable reflect promissory notes, signed when borrowing short-term funds from financial institutions. The current portion of long-term debt reflects the amount of long-term debt that comes due and must be paid within the next year. The company must have the financial resources to make good on this debt or be in a strong enough position to issue new debt.
Long-Term Liabilities
Long-term liabilities are loans and obligations payable in more than one year out. It can include accounts such as bonds, deferred income taxes, and pension obligations. Long-term bonds are the most common long-term liability and represent debt that has a maturity date and usually requires periodic interest payments.
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