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Current Liabilities

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He current liabilities of a company It is formed by its short term debts , which must be paid in a term less than twelve months . It is, therefore, the short-term liability that is current as there is no intention to remain in the company for a long time and is constantly rotating or moving.

The commercial credits (granted by suppliers and creditors, arise by the temporary distance between the moment of the acquisition of a good or service and the moment of making the payment), Bank credits (granted by entities financial, can be loans, lines of credit or effects discounts), corporate promissory notes (which constitute short-term financing) and the factoring (the sale of customer debits to other companies) are part of current liabilities.

It is worth mentioning that in the field of accounting, it is understood by short term (generally expressed as CP) to the period of weather that does not exceed the end of the current fiscal year. Within the current liability items, two classifications are recognized, which group together some of the situations expressed in the previous paragraph: the spontaneous and the express liability.

Spontaneous liabilities

It's about the financing no cost that the production cycle itself generates automatically. During the exploitation cycle, each company carries out its usual activities of selling, buying, paying its taxes; and all of them are normal sources of spontaneous liabilities.

Transactions with suppliers show accounts that must be paid for purchases made on credit. The use of services and the hiring of employees carry a series of obligations, of taxes that the company must pay. Finally, there are certain general expenses, such as equipment repairs and fees for specific jobs.

Expressive Liabilities

Any financing that is negotiated with banks or financial institutions, whose payment must be made in the short term and that entails the payment of a interest It is part of the express liability (also known as financial debt). In other words, it is any obligation that arises from operations that have been expressly contracted, that is, that have not been automatically generated by the production cycle.

Among the most common sources of this type of current liabilities are loans whose installments expire in the short term, commercial discount lines and credit policies. It is important to note that the term should be used debt to refer to all explicit cost financing (for which interest must be paid) both in the short or long term, and credit to refer to any short-term debt (that is, a financial debt that expires within the exercise in progress).

Finally, this use of credit with the abbreviation of credit policy, since this last concept is an authorization granted by banks to make a short spin, with a certain limit.

Related concepts

He fixed liability or Long-term liabilities , on the other hand, it is made up of the obligations and debts that are payable within a period of more than twelve months from the date of hiring. He contingent liability , for its part, is linked to obligations with transactions with a certain degree of uncertainty and that can be presented as the consequence of a future event.

Other types of liabilities are the deferred liabilities (with the obligations whose application is linked to the results), the assumed liability (the obligations of others that a company assumes on its own after the signing of a agreement) and the titled liability (documented debts borne by state agencies).

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