Current Portion of Long-term Loan – in case of a loan that is payable is more than one year, this heading would only include the portion of loan and interest that is payable in the current 12-months.Other Accrued Liabilities – As on the balance sheet, various expenses have been incurred by the organization, but their invoice has not yet been received, for example, utility bills and rents payable.Thus, liability against salaries due is recorded as accrued payroll. Accrued Payroll – Usually, employees are paid in arrears.Accounts Payable – It is referred to as the sum of all unpaid vendors & service providers.The typical list of items found under this heading are: In certain circumstances, the timing or the value of the financial liability will be uncertain, and these are referred to as ‘provisions’ in the balance sheet. These include salaries and wages payable and creditors payable, advance received from vendors, monthly utilities, and rent payable. See also Investments: Portfolio Weights And Portfolio Optimization Examples of Current Liabilities:Īpart from interest payable and the current portion of a long-term loan, many liabilities can be classified under the term current liabilities. Similarly, the interest liability related to a long-term loan, which is payable within the next year, will come under current liabilities. Say, if an entity has to pay creditors by virtue of purchase of raw material in 1-month time, then that liability will be categorized under current liabilities. 1) Current LiabilitiesĬurrent liabilities are referred to liabilities that are payable within a period of 12 months from the time of receipt of economic benefit. Types of Financial Liabilities:įinancial liabilities are classified into two broad types based on the time period within which they become payable. They may invest in fixed assets and working capital to create a robust platform for their business. Owners undertake these liabilities to fund their business. Definition and meaningįinancial liabilities are those liabilities in which a company or an individual has a contractual obligation to pay cash or deliver the financial asset.įor example, bank loans, finance lease liabilities, trade, and other payables, other interest-bearing financial liabilities.įinancial liabilities are useful for all organizations. This article looks at the meaning and types of various types of financial liabilities. Liabilities can be divided into two types: Financial liabilities and Non-Financial liabilities. International Financial Reporting Standards (IFRS) Framework defines liability as follows: “A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.” Generally, liability is referred to as anything that a company or an individual owes to another company or individual.