Glossary · Also called Long-term liability
Non-current liability
An amount a business owes that is not due for repayment within a year.
What it means
An obligation of a business that falls due more than twelve months after the reporting date.
Example
A five-year bank loan of RM60,000 is shown as a non-current liability.
Why it matters
It shows long-term funding and is kept separate from current liabilities so readers can judge short-term pressure.
In practice
A non-current liability is reported in the statement of financial position below current liabilities. It is part of the total owed by the business, but it is repayable more than twelve months after the reporting date. Typical examples are long-term bank loans, mortgages and debentures.
Suppose a business takes a five-year bank loan of RM50,000 and RM10,000 is due within the next year. Only that RM10,000 is shown as a current liability. The remaining RM40,000 stays non-current. This split shows readers how much pressure there is on cash in the short term.
The clearest contrast is with a current liability, which is due within a year, such as trade payables, a bank overdraft or accrued expenses. Timing separates the two, not the type of debt. The same loan can appear under both headings. Non-current liabilities also help show a firm's long-term financing and are used in gearing comparisons against capital.
If splitting a loan between current and non-current is a weak point, one of our teachers can work through some examples with you. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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