Current Liability
Definition
A current liability is a debt or obligation the business expects to pay within one year. Accounts Payable, credit card balances, and payroll liabilities are common current liabilities.
Example
Northstar Creative owes $1,100 in Accounts Payable and $600 on a business credit card. Both are current liabilities because they will be paid within a year.
Why It Matters
Current liabilities show what the business owes soon. Comparing them to current assets helps assess whether the business can cover its short-term debts.