Current Liabilities
Current liabilities are an enterprise’s obligations or debts that are due within a year or within the normal functioning cycle. Moreover, current liabilities are settled by the use of a current asset, either by creating a new current liability or cash. Current liabilities appear on an enterprise’s balance sheet and incorporate accounts payable, accrued liabilities, short-term debt and other similar debts.
Current Liabilities Formula:
Current Liabilities = (Notes Payable) + (Accounts Payable) + (Short-Term Loans) + (Accrued Expenses) + (Unearned Revenue) + (Current Portion of Long-Term Debts) + (Other Short-Term Debts)
Current Liabilities Calculation:
If company XYZ has the following current liabilities mentioned below
Account payable – ₹35,000
Wages Payable – ₹85,000
Rent Payable- ₹ 1,50,000
Accrued Expense- ₹45,000
Short Term Debts- ₹50,000
To calculate the total current liability, add all the accounts amount.
Current Liabilities = 35,000 + 85,000 +1,50,000 + 45,000 + 50,000
= 3,65,000
This calculation will give the total current liabilities amount for that particular year. Likewise, the calculation can be done for multiple years and see the difference.
Also Read: What are Non-Current Liabilities?
The above mentioned is the concept, that is elucidated in detail about ‘How to calculate Current Liabilities?’ for the Commerce students. To know more, stay tuned to BYJU’S.
Comments