Ans: Every business sorts its liabilities into current and long term liabilities. The current liabilities are the payable debts in one year while the long-term liabilities are the debts that get paid over a longer time frame. For example, if any business takes out a mortgage that needs to be paid within 20 years, then this is a long-term current liabilities in the balance sheet. However, if the mortgage payment is due within one year, then this will fall under current liability. The company should be able to pay the current liabilities with cash. The short term liabilities include accounts payable and payroll expenses. If it is a long-term liability, the company should be able to pay it through assets derived from its future earnings. The long term liabilities do not just include the loans and the bonds incurred by the company. It may also include deferred tax assets and liabilities on the balance sheet, rents, pension obligation, and payroll that can get listed in the balance sheet as a long-term liability.