Liabilities or debts are the opposite of assets. While assets contribute to building a company’s financial success, liabilities can take it away. Liabilities can be short-term or long-term in nature, or as accountants may call it, current and noncurrent.
Short-term liabilities, also called current liabilities or short-term debt, refer to the financial obligations that a company has to fulfill within a year i.e. 12 months.
These are business expenses and are often recurring in nature. These can include income tax, sales tax, interest payable on the loan, premium payable on insurance, payroll taxes, accrued salaries, and wages, etc.
Long-term liabilities, also called noncurrent liabilities or long-term debt, refer to the financial obligations that a company has to fulfill after the current accounting year. This can include payment of loans, debentures, mortgage, bonds payable, etc.