A liability that includes all debts that fall due within one year or during a firm’s operating cycle. Namely, current liabilities consist of: accounts payable, accrued expenses, and income tax payable. More specifically, current liabilities are obligations that need to be settled by current assets or by the creation of new current liabilities. The proper classification of liabilities provides a helpful source of information to investors and other users of the financial statements. In other words, it presents a true indicator of a firm’s financial ability to continue operations.