Definition of Current Liabilities

Current Liabilities are the short term obligations of a business that are payable within one year of time.

Example of Current Liabilities:

Current liabilities include accounts payable or creditors, short term bank overdraft, short term notes payable, current portion of leases, etc. Accounts payables or creditors are the payments that business owes to suppliers against the purchases of inventory or materials on credit. These are typically paid in three to twelve months.

Sometimes a bank offers a running finance facility to its business customers. This facility is provided to support the temporary shortage of cash that a business might face. The bank overdraft is an interest bearing liability and monthly interest is charged on overdrawn limits that are payable within a year.

Leases are long-term liabilities but the payments that are due within the next year are shown as part of current liabilities.