Liabilities are usually separated into two categories, current and long-term liabilities. Current liabilities are those debt obligations of the firm which are due within one year of the date of the balance sheet. Typical categories include accounts payable, taxes payable, and loans payable. All three of these categories need to be monitored very carefully. Accounts payable is a summary of the credit that our suppliers have extended to us.
Trade credit is the best and cheapest credit available.
We want to make sure that we keep in good standing with our suppliers and that we do not fall beyond on our payments for materials or inventory. To ensure that we stay current on our trade obligations, we need an aging schedule for our accounts payable similar to our accounts receivable aging schedule. Taxes payable consists of several subcategories such as payroll taxes payable, sales tax payable, and estimated income taxes payable. Since we withhold income and payroll taxes from our employees for remission at a later date, and collect sales tax now and remit it later, the taxes payable category can be considered credit from various levels of government. However, using, or abusing, this credit can lead to dire consequences.