Ministry of education tashkent financial institute

Current liabilities in the balance sheet

The balance sheet is a document that reflects the assets, liabilities, and capital of a company, to keep a good administration and order in the accounting area, to know what is the true economic situation of the company. Current liabilities are included in the classification of liabilities, together with fixed or non-current liabilities. It is essential that the current liabilities be lower than the fixed assets, and this would mean that the company has a good cash income and is able to pay for expenses and short-term debt. Current liabilities should never exceed fixed assets since assets will begin to be financed by current liabilities. The less current liabilities there are, the better for the company since it will have a greater margin of assets, which means cash.

Current liabilities, also known as short-term liabilities, are debts or obligations that need to be paid within a year. Current liabilities should be closely watched by management to ensure that the company possesses enough liquidity from current assets to guarantee that the debts or obligations can be met.