Current liability
A current liability is normally settled in the operating cycle, held primarily for trading, due within twelve months, or a liability whose settlement the entity does not have a right to defer for at least twelve months at the reporting date. Other liabilities are normally non-current. Trade payables are usually current as part of the operating cycle.
Worked example
The next $5,000 instalment of a long-term loan is due within twelve months and is normally presented as current.
Common mistake
Management’s intention to refinance is not enough by itself: assess the rights existing at the reporting date and the question’s terms.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |