when a company determines that it received an economic benefit that must be paid within a year it must immediately record a credit entry for a current liability depending on the nature of the received benefit the company s accountants classify it as either an asset or expense which will receive the debit entry 
for example a large car manufacturer receives a shipment of exhaust systems from its vendors to whom it must pay 10 million within the next 90 days because these materials are not immediately placed into production the company s accountants record a credit entry to accounts payable and a debit entry to inventory an asset account for 10 million when the company pays its balance due to suppliers it debits accounts payable and credits cash for 10 million suppose a company receives tax preparation services from its external auditor to whom it must pay 1 million within the next 60 days the company s accountants record a 1 million debit entry to the audit expense account and a 1 million credit entry to the other current liabilities account when a payment of 1 million is made the company s accountant makes a 1 million debit entry to the other current liabilities account and a 1 million credit to the cash account example of current liabilitiesbelow is a current liabilities example using the consolidated balance sheet of macy s inc m from the company s 10 q report reported on aug 3 2019 image by sabrina jiang investopedia 2020