The distinction between current and noncurrent liabilities is a function of time. A debt that is expected to be
satisfied within one year from the date of the balance sheet is classified as a current liability1. Amounts owed
for rent, insurance, utilities, inventory purchases, and the like usually fall into this category. If payment will not
be made until after that one-year interval, the liability is reported as noncurrent. Bonds and notes payable are
common examples of noncurrent debts as are liabilities for employee pensions, long-term leases, and deferred
income taxes. Current liabilities appear before noncurrent liabilities on a balance sheet.