armember-membership domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home1/wanrru6iyyto/public_html/wp-includes/functions.php on line 6114ARMember domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home1/wanrru6iyyto/public_html/wp-includes/functions.php on line 6114The current liabilities section of the balance sheet identifies those amounts due to third parties within the current year. These include accounts payable, credit card accounts, accrued payroll, taxes, unearned revenue, deposits and those amounts due within one year related to debt instruments. In general they are listed from the most immediate amounts due to those amounts due over more accounting cycles but still due within one calendar year.<\/span><\/p>\n This article will describe each of the respective sub-sections of the current liabilities section of the balance sheet. In addition, this article will describe how to read the information<\/span><\/strong><\/a> in the various formats customarily found on various types of presented balance sheets<\/span><\/strong><\/a>.<\/span><\/p>\n The following sub-sections are categorized based on those accounts due within the accounting cycle (typically 30 days) and those extended out further into the current year and those within one year of the current accounting period.<\/span><\/p>\n Probably the one named account most customarily associated with current liabilities. Accounts payable are associated with your vendors and suppliers for the materials and\/or products you sell. A good example of this is an auto parts supplier.\u00a0 He purchases parts from various suppliers and directly from the auto manufacturers. Most of the bills that come to the auto parts store require payment within 30 days of delivery. The store may receive the bill 3 days after receiving the part and they have 27 days remaining to get it paid.<\/span><\/p>\n Sometimes the store may order a large batch of parts or supplies (oil, lubricants, fluids etc.) and they could receive a payment plan. For example, 1\/3 is due within 30 days of delivery, another 1\/3 in 60 days and the final 1\/3 in 90 days.<\/span><\/p>\n Because most cases dictate payment within 30 days of delivery, this master account \u2013 \u2018Accounts Payable\u2019 is located at the top of the list of current liabilities.<\/span><\/p>\n It is not uncommon for small businesses to have credit cards to purchase materials and supplies while onsite at jobs or for travel purposes. Most credit cards are due within 20 days of receipt of the bill from the credit card company. For the actual purchases you could have up to 50 days to pay for the item purchased. Therefore, because there is little more time involved in the opportunity to pay on the account, it is generally listed 2nd<\/sup> in line after Accounts Payable in the list of Current Liabilities.<\/span><\/p>\n In most business operations, there is generally a delayed payment in comparison to the actual work completed by the staff. It is not uncommon to offset the payroll payment by 7 days after completion of the payroll cycle. This is beneficial to the small business because it allows them opportunity to resolve discrepancies and properly process the payroll in a timely manner.<\/span><\/p>\n If you pay at the end of the accounting cycle, then approximately 7 days of payroll is unpaid and should be accounted for in the books of record for true accrual accounting. This payroll amount will be paid in the next cycle, so it is considered a liability. In addition to the gross wages, the employer often has to pay for associated benefits, retirement, and payroll taxes. Some of these taxes are not due until the end of the quarter which identifies that some of this owed money has a longer time period to pay than credit cards or traditional accounts payable.<\/span><\/p>\n The most common tax due is sales tax which is most often a monthly requirement. At the end of the current accounting cycle, the amount of sales taxes collected is paid within the next accounting cycle. But some taxes are not due until closer to the end of the quarter. These include income taxes<\/span><\/strong><\/a> (federal and\/or state), revenue based taxes, and property taxes<\/span><\/strong><\/a> (personal and real estate).\u00a0 Because this sub-section runs the entire spectrum of payment periods, this liability is placed fourth in the line-up of liabilities.<\/span><\/p>\n Unearned revenue (also known as deferred revenue) is defined as prepayments for future deliveries of product or services. In most situations customers prepay for services and\/or products that will be delivered in the near future (within one accounting cycle). But it is not uncommon to have the product and\/or service beyond the next accounting cycle due to contract requirements or some other trigger mechanism. Depending on the nature of the industry, it can be found closer to accounts payable, but for the small business owner, this is the best overall location within the spectrum of current liabilities.<\/span><\/p>\n Traditionally deposits are a formal compliance to a contract. The most common type of deposit is for utilities. Often power companies or energy suppliers require a deposit to offset a possible future failure to pay by the customer and so therefore the utility company posts this as a current liability. Other deposits are contract related and their reclassification to sales only occur based on performance in a contract. Because the performance issue is ambiguous as it relates to time (it may be well defined within the contract) this sub-section is place further away from the current accounting cycle level and closer to the extended period relationship but well within the one year limit for identification as a current liability.<\/span><\/p>\n Here we place those current amounts due related to financial instruments (formalized documents). Most often they are<\/span> lines of credit<\/span><\/strong><\/a> or short term notes to some institution. Notice how in this lower half of current liabilities we have accounts with documented obligations. Deposits are contractual. Bank notes are most often collateralized and so are lines of credit.<\/span><\/span><\/p>\nAccounts Payable<\/span><\/strong><\/h2>\n
Credit Card(s)<\/span><\/strong><\/h2>\n
Accrued Payroll<\/span><\/strong><\/h2>\n
Taxes<\/span><\/strong><\/h2>\n
Unearned Revenue<\/span><\/strong><\/h2>\n
Deposits<\/span><\/strong><\/h2>\n
Lines of Credit & Bank Notes<\/span><\/strong><\/h2>\n