{"id":279,"date":"2024-09-06T16:48:13","date_gmt":"2024-09-06T16:48:13","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/introduction-to-current-liabilities\/"},"modified":"2024-09-06T16:48:13","modified_gmt":"2024-09-06T16:48:13","slug":"introduction-to-current-liabilities","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/introduction-to-current-liabilities\/","title":{"raw":"Introduction to Current Liabilities","rendered":"Introduction to Current Liabilities"},"content":{"raw":"\n

What you will learn to do: Define current liabilities<\/h2>\nLiabilities are obligations to pay cash, provide services, or deliver goods at some future time.\n\nFASB\u2019s Concept Statement No. 6, in place for more than 20 years, defines liabilities as \u201cprobable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.\u201d\n\nMost balance sheets divide liabilities into current liabilities and long-term liabilities.\n\nLet\u2019s zoom in on The Home Depot balance sheet<\/a> for the fiscal year ended February 2, 2020:\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
THE HOME DEPOT INC.\nCONSOLIDATED BALANCE SHEET\n<\/caption>\n
in millions, except per share data<\/em><\/th>\nFebruary 2, 2020<\/th>\nFebruary 3, 2019<\/th>\n<\/tr>\n<\/thead>\n
Category, <\/span>Liabilities and Stockholders' Equity<\/strong><\/td>\n<\/tr>\n
Subcategory, <\/span>Current liabilities:<\/td>\n<\/tr>\n
     Short term debt<\/td>\n$     974<\/td>\n$     1,339<\/td>\n<\/tr>\n
     Accounts payable<\/td>\n7,787<\/td>\n7,755<\/td>\n<\/tr>\n
     Accured salaries and related expenses<\/td>\n1,494<\/td>\n1,506<\/td>\n<\/tr>\n     Sales taxes payable<\/td>\n605<\/td>\n656<\/td>\n\n\n     Deferred revenue<\/td>\n2,116<\/td>\n1,782<\/td>\n\n\n     Income taxes payable<\/td>\n55<\/td>\n11<\/td>\n\n\n     Current installments of long-term debt<\/td>\n1,839<\/td>\n1,056<\/td>\n\n\n     Current operating lease liabilities<\/td>\n828<\/td>\n---<\/td>\n\n\n     Other accrued expenses<\/td>\n2,677<\/td>\n2,611<\/td>\n\n
       Total current liabilities<\/td>\nSingle line<\/span>\n18,375<\/td>\nSingle line<\/span>\n16,716<\/td>\n<\/tr>\n
Long-term debt, excluding current installments<\/td>\nSingle line<\/span>28,670<\/td>\nSingle line<\/span>26,807<\/td>\n<\/tr>\n
Long-term operating lease liabilities<\/td>\n5,066<\/td>\n---<\/td>\n<\/tr>\n
Deferred income taxes<\/td>\n706<\/td>\n491<\/td>\n<\/tr>\n
Other long-term liabilities<\/td>\n1,535<\/td>\n1,867<\/td>\n<\/tr>\n
          Total liabilities<\/td>\nSingle line<\/span>\n54,352<\/td>\nSingle line<\/span>\n45,881<\/td>\n<\/tr>\n
<\/td>\nSingle line<\/span><\/td>\nSingle line<\/span><\/td>\n<\/tr><\/tbody>\n<\/table>\n\n \n\n\nCurrent liabilities are obligations that (1) are payable within one year or one operating cycle, whichever is longer, or (2) will be paid out of current assets or create other current liabilities.\n\nLong-term liabilities are obligations that do not qualify as current liabilities.\n","rendered":"

What you will learn to do: Define current liabilities<\/h2>\n

Liabilities are obligations to pay cash, provide services, or deliver goods at some future time.<\/p>\n

FASB\u2019s Concept Statement No. 6, in place for more than 20 years, defines liabilities as \u201cprobable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.\u201d<\/p>\n

Most balance sheets divide liabilities into current liabilities and long-term liabilities.<\/p>\n

Let\u2019s zoom in on The Home Depot balance sheet<\/a> for the fiscal year ended February 2, 2020:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
THE HOME DEPOT INC.
\nCONSOLIDATED BALANCE SHEET
\n<\/caption>\n
in millions, except per share data<\/em><\/th>\nFebruary 2, 2020<\/th>\nFebruary 3, 2019<\/th>\n<\/tr>\n<\/thead>\n
Category, <\/span>Liabilities and Stockholders’ Equity<\/strong><\/td>\n<\/tr>\n
Subcategory, <\/span>Current liabilities:<\/td>\n<\/tr>\n
     Short term debt<\/td>\n$     974<\/td>\n$     1,339<\/td>\n<\/tr>\n
     Accounts payable<\/td>\n7,787<\/td>\n7,755<\/td>\n<\/tr>\n
     Accured salaries and related expenses<\/td>\n1,494<\/td>\n1,506<\/td>\n<\/tr>\n<\/tbody>\n
       Total current liabilities<\/td>\nSingle line<\/span>
\n18,375<\/td>\n		Single line<\/span>
\n16,716<\/td>\n<\/tr>\n
Long-term debt, excluding current installments<\/td>\nSingle line<\/span>28,670<\/td>\nSingle line<\/span>26,807<\/td>\n<\/tr>\n
Long-term operating lease liabilities<\/td>\n5,066<\/td>\n—<\/td>\n<\/tr>\n
Deferred income taxes<\/td>\n706<\/td>\n491<\/td>\n<\/tr>\n
Other long-term liabilities<\/td>\n1,535<\/td>\n1,867<\/td>\n<\/tr>\n
          Total liabilities<\/td>\nSingle line<\/span>
\n54,352<\/td>\n		Single line<\/span>
\n45,881<\/td>\n<\/tr>\n
<\/td>\nSingle line<\/span><\/td>\nSingle line<\/span><\/td>\n<\/tr>\n<\/table>\n

 <\/p>\n

Current liabilities are obligations that (1) are payable within one year or one operating cycle, whichever is longer, or (2) will be paid out of current assets or create other current liabilities.<\/p>\n

Long-term liabilities are obligations that do not qualify as current liabilities.<\/p>\n","protected":false},"author":6,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Current Liabilities\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Accounting Principles: A Business Perspective\",\"author\":\"James Don Edwards, University of Georgia & Roger H. Hermanson, Georgia State University\",\"organization\":\"Endeavour International Corporation\",\"url\":\"\",\"project\":\"The Global Text Project\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":277,"module-header":"","content_attributions":[{"type":"original","description":"Introduction to Current Liabilities","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""},{"type":"original","description":"Accounting Principles: A Business Perspective","author":"James Don Edwards, University of Georgia & Roger H. Hermanson, Georgia State University","organization":"Endeavour International Corporation","url":"","project":"The Global Text Project","license":"cc-by","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/279"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":0,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/279\/revisions"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/277"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/279\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=279"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=279"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=279"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}