What is a current liability?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
A current liability is an amount a business owes that is due to be paid within 12 months. Common examples are unpaid supplier bills, credit card balances, interest owed and wages that staff have earned but not yet been paid. Debts due after 12 months are long-term liabilities.
Current liabilities are the calls on the business's cash in the months ahead. Some arrive as bills, such as a supplier invoice with payment terms. Others build up quietly, such as wages accrued at the end of a pay period or interest on a loan, and recording both kinds is what makes the total complete.
A loan can sit in both groups. The part due to be repaid within the next 12 months is usually shown as current and the remainder as long-term, so the balance sheet shows what has to be found soon rather than the whole amount owing.
In Australia
business.gov.au defines a current liability as one that is due for payment within 12 months. Its balance sheet template places credit cards payable, accounts payable, interest payable and accrued wages under current liabilities, and loans due after a year or more under long-term liabilities.
Its glossary describes accounts payable as a record of short-term liabilities, less than 12 months old, such as invoices for goods or services and utility bills. A creditor, in the same glossary, is anyone you owe money to, such as a lender or a supplier.
Worked example
| Item | Amount (AUD) |
|---|---|
| Accounts payable | 3,850.00 |
| Credit card | 1,120.00 |
| Accrued wages | 2,400.00 |
| Interest payable | 180.00 |
| Current portion of business loan | 4,800.00 |
| Total current liabilities | 12,350.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Leaving unpaid supplier bills out of the records, so the business looks as if it owes less than it does.
- Showing the whole balance of a long-term loan as current, or none of it, without checking when the repayments fall due.
- Missing wages that staff have earned but not yet been paid at the balance sheet date.
Related terms
Related service
Accounts payable and receivable
Bills and invoices tracked, with you approving every payment.
Sources
- Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Set up a balance sheet
business.gov.au, Australian Government. Current at 15 October 2026, released 18 January 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.