current liabilities examplesIn the fewest possible words, a liability is a debt. “Debt” refers to more than just money, however. It can be an obligation, a tax, a contribution, a responsibility – you get the picture. Liabilities come in a variety of shapes and sizes. Current liabilities, the topic of this post, are simply liabilities that are due within 12 months.

Liabilities apply primarily to companies and individuals and these are our two main points of interest. Below you will find lists (with explanations as necessary) of current liabilities examples for companies and individuals. Round out your bookkeeping knowledge with this excellent introduction to financial accounting program.

Current Liabilities For Individuals

Let’s start with the personal stuff. I want to explain the first example or two just so that we understand why these items are current liabilities:

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Current Liabilities For Companies

Companies tend to have far, far more current liabilities than individuals (or, at least, they have more options available). The first liabilities we’re going to look at are just your standard, run-of-the-mill liabilities. You’ll notice that some of these, such as taxes and interest and loans, overlap with individual current liabilities.

Accrued Liabilities

Accrued liabilities are just like they sound: they are liabilities that do not yet appear on the accounts payable. In other words, a good or service has been received but it has neither been invoiced, recorded nor paid. If we use the payroll example above, an employee who works two weeks before getting paid accrues those wages. Accrued liabilities are often routine (that is, recurring, such as employee wages), but they can also be non-routine or one-time liabilities, as well. I mentioned accrued expenses above, but let’s look at a few of the common examples:

If you just want to make sure you have all the fundamentals covered when it comes to accounting, then simply read this fantastic post on the accounting concepts everyone should know.

Payroll Liabilities

At this point we should almost be able to figure this out ourselves. Payroll liabilities are mostly accrued, as you will see below. The sheer number of possible payroll liabilities should put in perspective the legal hurdles every company must clear simply by having employees.

At this point, you might consider some further reading on other concepts. This post on an introduction to finance reviews all the big ideas in management, accounting and markets.

Understanding Business Through Accounting

I learned the most about how a business functions when I was the bookkeeper for a small horse racing company in New York. Accounting is kind of like the coding behind software: it represents the real work and numbers that make a business tick, and for this very reason it’s one of the best ways to get a better grasp on the fundamentals of business.  Anyone can take this approach with this five-star Learn Accounting, Understand Business course that helps you develop a business mindset through the application of basic accounting concepts.

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