 Current liabilities are debts with two key features. The first is that a company expects to pay the debt from existing current assets or through the creation of other current liabilities. The second is that the company will pay the debt within one year or one operating cycle, which is ever longer. Current liabilities are either known amounts or estimated amounts. Here is a list of the common current liability whose amounts need to be estimated. Let's look at these in more detail. Accrued liabilities are amounts owed at the end of the period, but a company doesn't know the exact amount. Well, not knowing the amount doesn't make the liability go away, so the liability has to be estimated. Let's look at an example. ECHO owed the city of Bunnyman for electricity for the month of June. The bill doesn't arrive until July 15th. ECHO must estimate the amount owed as of June 30th. Summer months utilities usually run between $4,000 and $5,000. So I estimated the amount to be $4,500 for the sake of this example. The journal entry is a debit to utilities expense and a credit to utilities payable for $4,500. Estimating $4,500 of utilities expense provides better information to investors and creditors than reporting nothing. Another example of estimated liabilities is product warranties. Warranties are promises sellers make to buyers that protects buyers for a certain period of time against deficient quality, quantity, or performance of a product. More about warranties when we learn about contingent liabilities.