Question

What is a current liability? Distinguish between a current liability and a long term debt.

Answer 1

Current liabilities are those liabilities which become due or obligation are to be meet within a(one) normal accounting cycle.

Examples of current liabilities are accounts payable, expenses payable, short term loans, etc

Difference:-

Current liabilities becomes due or obligation are to be made within a(one) accounting cycle and these are also recurring in nature.

But long term debts are debts which becomes due or obligation for payment arises after a period of one accounting cycle i.e.after 12 months, and these are non reccurring in nature.