What is current liabilities?

When talking about the accounting of a company, and, specifically, its liabilities; that is to say, the debts incurred, a distinction is usually made between current and non-current liabilities. Current liabilities are understood to be that part of the liabilities of a company that contains and obligations whose expiration will take place in the short term, or what is the same, in a term of less than one year. This type of liability is also called a current liability, or a short-term liability.

What accounts make up current liabilities?

Within current liabilities, various accounts can be distinguished, such as:

  • Short-term debts,
  • Short-term debts with associated companies or the group,
  • The creditors short commercials,
  • Creditors for the provision of short-term services,
  • Provisions that expire within one year, and, in general,
  • Other accounts payable, short term.

Both current liabilities and current activeThey are essential for the company, since a good administration of them will allow it to preserve liquidity. Otherwise, the company may find itself in a situation where, despite having sufficient assets to satisfy its debts, it is not able to face them due to lack of liquidity. Continuing with the above, current assets also correspond to the part of the assets that will leave the company in the short term.

Fundamentally, it is made up of some components such as merchandise, that is, the products and services provided by the company, including various raw materials or inputs that are part of the production process, which are intended to be sold as part of the product or service, within one year. But what is really important is the determination of the so-called working capital, which consists precisely of the difference between current assets and current liabilities. That is, the goods or services that have to be sold in the short term, and that exceed the amount of debts to be paid in the same period of time.

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