What do you mean by Current Liabilities?[5 Marks]

Current Liability
As per the revised Schedule, a liability shall be classified as current when it satisfies any of the following norms :
  1. it is expected to be settled in the company's normal operating cycle;
  2. it is held primarily for the purpose of being traded;
  3. it is due to be settled within 12 months after the reporting date; or
  4. the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other liabilities shall be classified as non-current.
Some current liabilities, viz. trade payables and some accruals for employee and other operating costs, are part of the working capital used in the entity's normal operating cycle. Such operating items are current liabilities even if they are due to be settled more than 12 months after the reporting period.
Other current liabilities are not settled as part of the normal operating cycle, but are due for settlement within 12 months after the reporting period or are held primarily for the purpose of trading.