Current vs

Longterm Liabilities
What Current →
Obligations to within
pay year
are one

Liabilities?
The most common
being Accounts
Payable
Others are : •
Taxes
•

Wages
•

Unpaid expenses
-

Short -
term lakhs

( current)
short term loans needed to within
year
one
pay
-
: .

( Non
Liability
current)
-

Long term
-

Liability Liabilities
① Current

Liability Accounts
Payable Many companies purchase inventory on
-

Account in credit from supplies

vendors or .
When the supplier delivers the
the Balance
inventory company
,
the
usually has 30
days to
pay for account
it .

obligation to pay is referred

This
Sheet
accounts No written
to as
payments
contract needs
on

Thepayable
or . to be
in
place to either be oral
.

promise pay
can or even

implied .

Accrued
Expenses
cannot do
expense a company knows it must
are

so because it has
an

been billed for

pay ,

them The
but
accounts
yet
for these costs that the
.

company anyway so
better indication of what its total liabilities are
-
Is an Accrued
management has a .

Expense a Example :

Debit or credit ? Stonemill reaches the end of August, and its employees have done work that
they have not yet been paid for. The amount of the unpaid wages totals $31,000.
This would be considered an accrued expense. As such, Stonemill’s’
bookkeeper would:

• Debit $31,000 to “Wage Expenses” (reflected on a company’s income statement

under “Operating Expenses”)
• Credit $31,000 to “Wages Payable” (this would show up under “Short Term Liabilities”
on the balance sheet).