For a current liability to exist, the liability must be due usually within a year and must be paid out of current assets.

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A current liability is a debt or obligation that is due within one year or the operating cycle of a business (whichever is longer) and is expected to be paid using current assets or by creating another current liability. Examples of current liabilities include accounts payable, salaries payable, taxes payable, and short-term loans.

For a Current Liability to Exist, the Liability Must Be