From the course: A Guide to Understanding Financial Statements
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Current liablities
From the course: A Guide to Understanding Financial Statements
Current liablities
- [Instructor] Now that we're familiar with what exactly liabilities are, let's talk about current liabilities. Like we spoke about with current assets, current liabilities are liabilities that are due to be repaid typically within a 12-month period. Examples of current liabilities can be accounts payable, credit cards, deferred revenue, or even accrued expenses. Let's now briefly go over what each of these mean. Accounts payable is the opposite of accounts receivable. This time, it's an amount that you owe to a vendor for goods or services that you purchased on credit. Like we spoke about, this would show up as a current asset on the balance sheet, as well as an operating activity on the statement of cash flows, which we'll talk about soon. Accounts payable is very important, especially when it comes to cashflow management. The higher your accounts payable balance is, the more you may be utilizing favorable credit terms with your vendors. At the same time, you want to keep track of…
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