What is a Short-Term Liability?

A short-term liability is a financial obligation that is to be paid within one year. This type of liability is classified within the current liabilities section of an entity’s balance sheet. Examples of short-term liabilities are as follows:

Trade accounts payable. Includes all billed liabilities owed to the suppliers of a business.
Accrued expenses. Includes all unbilled liabilities owed to the suppliers of a business.
Taxes payable. Includes all taxes payable to the applicable government entities; examples are sales taxes and use taxes.
Dividends payable. Includes all dividends declared by the board of directors, but not yet paid to shareholders.
Customer deposits. Includes deposits received from customers for goods or services not yet delivered to them.
Short-term debt. Includes all debts owed by the business that are payable within one year.
Current portion of long-term debt. Includes that portion of an entity’s long-term debts that are payable within one year.
Other accounts payable. Includes all other obligations of the business that are not included in the preceding list of liability accounts.

Presentation of Short-Term Liabilities

All short-term liabilities are presented within the current liabilities section of the balance sheet. A sample presentation appears in the following exhibit.