Other Current Liabilities
What Are Other Current Liabilities?
Other current liabilities, in financial accounting, are categories of short-term debt that are lumped together on the liabilities side of the balance sheet. The term "current liabilities" alludes to things of short-term debt that a firm must pay in 12 months or less. To that, companies add "other" to portray those current liabilities that are not sufficiently huge to distinguish separately on their own lines in financial statements, so they are gathered as "other current liabilities."
Other current liabilities might be appeared differently in relation to other current assets, found on the assets side of the balance sheet.
Grasping Other Current Liabilities
Before you can comprehend the concept of other current liabilities, you must understand what the term current liabilities means.
Other current liabilities are essentially current liabilities that are not sufficiently important to possess their own lines on the balance sheet, so they are assembled together.
Current Liabilities
The current liabilities section of the balance sheet records the debt obligations that a company must pay in no less than 12 months, instead of long-term liabilities, which a company might pay down over the long haul. Notwithstanding the famous accounts payable thing, instances of current liabilities comprise of things like short-term loans from banks, including a line of credit; notes payable; dividends and interest payable; bond maturity proceeds payable; consumer deposits; reserves for charges; and accrued benefits and payroll.
Other Current Liabilities
Contingent upon the company and its industry, you will see numerous sorts of things listed under other current liabilities. Typically, you can track down clarifications of these "other" liabilities some place in the company's annual report or Form 10-K; they likewise might be itemized in the footnotes to the financial statements.
Frequently, you can recognize the significance of the other current liability entry by its name. For instance, in the event that a business records commercial paper or bonds payable as a current liability, you can be genuinely certain that the amount listed will be paid to the company's bondholders in the short term. The equivalent is true for accrued benefits and payroll; these categories are monies owed to employees as bonuses and salaries, which the company has not yet paid however needs to pay soon.
Why Use Other Current Liabilities?
Financial statements can turn out to be very complex. On the off chance that each asset and liability account were listed by detail, the balance sheet could balloon to many pages, which would be less helpful to perusers. So a few companies aggregate their balance sheet accounts for simplicity; refering to other current liabilities on one line as a catch-for liabilities coming due inside the next-12 months that fit flawlessly into no other descriptive detail.
Accounts that require greater transparency frequently become a single detail, and accounts that are not essential to a firm's [core operations](/working activities) might be gathered as "other."
Special Considerations
Albeit the footnotes to the balance sheet contain a lot of insight about the other current liabilities, these ought not be mistaken for off-balance-sheet financing activities, whose exposures are likewise remembered for the footnotes. Since off-balance-sheet financing adds the potential for controlling financial statements, these sections in the footnotes are in many cases subject to extraordinary examination by auditors and investors.
Involving other current liabilities as a category is standard practice and needn't bother with the level of survey frequently seen with off-balance sheet things.
Features
- The term, other current liabilities is a detail on the balance sheet.
- They are gathered for simplicity and clarity.
- "Other" means that these current liabilities are not adequately huge to possess their own line.
