WHAT IS A LIABILITY?
Liabilities are things that are owed by the business which are
the obligations or debts of the business. These could be classed as:
·
Non-Current liabilities
·
Current liabilities
Non-Current liabilities are obligations that are owed by
the business over a long period of time usually for longer than one year and
these are also called long-term liabilities Examples include:
·
Long-term loans
·
Long-term credit facility arrangements
·
Long-term bond payable arrangements
Current liabilities are things that are owed by the
business over a short period of time usually for shorter than one year and
these are also called short-term liabilities. Examples include:
·
Creditors
·
Short-term debts
·
Accrued expenses
Your task:
Identify 3 differences between current and
non-current liabilities