Current Liabilities
The short term debts owned by the company and that can be paid off within one year is termed as current liabilities of the company. It includes all the capital that a company must pay to its suppliers and creditors within one year. If a company is required to pay off its current liabilities instantly, then they will have to convert some of their assets into cash to make the settlements.
The liabilities of a business or an organization depend on the following factors:
Payable Accounts:
This includes the basic cost of the goods or raw materials that was purchased by the company. A company or a business organization has the right to hold back the accounts payable for certain period of time, but after which it may have to make immediate settlement of the accounts payable.
Income tax payable
The total tax that a company must pay to the government for the incurring financial year also comes under its current liabilities.
Short-term debts
This includes the borrowed loans from banks, with tenure of one year for replacement.
Long-term debts
This includes the company’s long term obligation to pay premiums for borrowed mortgage loan or any other long term repayment policies.
Other incurred expenses
This is the cost to the company, caused by various factors that are not recorded in the payable accounts. This includes the cost of repair, loss of work due to absence of employee, etc.
