Current liabilities are a company’s short-term financial obligations that are due to be settled within one year or within the operating cycle—whichever is longer. These liabilities represent amounts the business owes to creditors, suppliers, employees, or government entities and are typically paid using current assets like cash or receivables.

Common examples of current liabilities include:

• Accounts payable (money owed to suppliers)

• Wages payable (employee salaries and benefits due)

• Taxes payable (income, sales, or payroll taxes)

• Short-term loans or lines of credit

• Unearned revenue (payment received in advance for goods or services yet to be delivered)

• Current portion of long-term debt

Current liabilities are listed on the balance sheet and are important indicators of a company’s liquidity and financial health. Businesses must carefully manage their current liabilities to ensure they have enough current assets to cover them, which is commonly evaluated using the current ratio (current assets ÷ current liabilities).

Failing to meet short-term obligations can lead to financial difficulties, damaged credit, or legal issues. By monitoring current liabilities, businesses can plan cash flow more effectively, maintain good supplier relationships, and ensure compliance with tax and legal requirements.

In short, current liabilities reflect the company’s near-term financial commitments and readiness to meet them.