Current Liabilities Definition

A current liability is an obligation of a company that is due to be paid within one year. Current liabilities are typically short-term debts that the company has incurred in the normal course of business. The most common types of current liabilities include accounts payable, salaries and wages payable, taxes payable, and other accrued expenses.

A current liability arises when a company obtains goods or services from another party on credit. When the bill for those goods or services comes due, the company must pay its debt, which is classified as a current liability. Companies may also incur current liabilities in the form of loans from banks or other financial institutions. These loans must be repaid within a specified period of time, usually one year or less.