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Full Version: Note on Current Liabilities and Contigencies
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Defined Liabilities as
Probable 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.

In other words, a Liability has three essential characteristics
#61656;It is a present obligation that entails settlement by probable future transfer or use of cash, goods, or services.
#61656;It is an unavoidable obligation.
#61656;The transaction or other event creating the obligation has already occurred.
Because liabilities involve future disbursements of assets or services, one of their most important features is the date on which they are payable. Currently maturing obligations must be satisfied promptly and in the ordinary course of business if operations are to be continued. Liabilities with a more distant due date do not, as a rule, represent a claim on the enterprises current resources and are therefore in a slightly different category. This feature gives rise to the basic division of liabilities into (1) current liabilities and (2) long-term debt.

Current liabilities are
obligations whose liquidation is reasonably expected to require use of existing resources properly classified as current assets, or the creation of other current liabilities.