Liabilities Elements

Classification of Liabilities

Generally, liabilities are classified as follows:

• Current
• Non-Current 

Liabilities are classified as Current Liabilities when any of the following criteria are met:

1. It is expected to be settled in the normal course of the organization's operating cycle.
2. It is due to be settled within the twelve months of the Statement of Financial Position date.

Operating cycle means the time between the acquisition of materials entering into a process and its realization in cash or an instrument that is readily convertible into cash.

Non-Current Liabilities are those liabilities which does not meet the criteria of current liabilities.

Generally, they comprise the portion payable beyond one-year of a long-term nature (usually, more than 12 months from SFP date).

Examples of Liabilities Elements

Current Liabilities Elements

• Accounts Payable
• Notes Payable
• Accrued Interest Payable
• SSS Premium Payable
• Withholding Tax Payable

Non-Current  Liabilities Elements

• Long Term Payable

Normal Balance : Credit

Liability accounts has normal credit balances.

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