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Definition

Current liability

A current liability is a debt that a company can reasonably expect to pay (1) from existing current assets or through the creation of other current liabilities, and (2) within one year or the operating cycle, whichever is longer.

Debts that do not meet both criteria are classified as long-term liabilities. Most companies pay current liabilities within one year out of current assets, rather than by creating other liabilities.

Current liabilities include notes payable, accounts payable, and unearned revenues. They also include accrued liabilities such as taxes, salaries and wages, and interest payable.

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