Explain current liabilities A current liability is an obligation that is due within one year of the date of a company balance sheet and will require the use of a current asset of will create another current liability. If a company operating cycle is longer than one year the liabilities are due within the operating cycle. · What is it important to distinguish between current and long-term liabilities? A long term liabilities are expects to pay back over the course of more than one year. Current liabilities are the obligations that are due within one year of the balance sheet date and will require a cash payment or will need to be renewed. Current and long term liabilities are a central focus of a business owner financial planning efforts. Long term liability is usually formalized through paperwork that liaats its term such as the principal amount involved its interest payment and when it comes due. Long term liabilities include notes payable, bonds payable, bank loans and mortgages.