What Goes in Other Current Assets and Other Current Liabilities?
Other current assets is line 6 on all three returns, and other current liabilities is line 18 on Form 1120 and 1120-S and line 17 on Form 1065. Both require an attached statement. Prepaid expenses are the most common other current asset; accrued expenses, payroll liabilities and sales tax payable are the most common other current liabilities.
| Trial balance account | Where it goes on the return | Watch for |
|---|---|---|
| Prepaid expenses | Line 6, other current assets | Unexpired portion only |
| Employee advances | Line 6 | Not loans to owners |
| Deposits paid | Line 6, or other assets if long term | Refundable deposits are assets |
| Accrued expenses | 1120 and 1120-S line 18, 1065 line 17 | With a statement |
| Payroll liabilities | Same line | Withholding not yet remitted |
| Sales tax payable | Same line | Never revenue |
| Unearned revenue | Same line | Possible M-1 difference |
| Income taxes payable | Same line | Mostly a C corporation item |
| Credit card balances | Accounts payable or other current liabilities | Never negative cash |
One account at a time works until there are 200 of them.
Try it freeWhat Goes in Other Current Assets and Other Current Liabilities? on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses (the account this page is about) | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Other operating expenses | 9,200.00 | |
| Accrued expenses | 9,200.00 |
Two catch all lines, two statements
Schedule L names about a dozen specific assets and liabilities. Everything else current goes into other current assets, line 6, or other current liabilities, line 18 on a corporate return and line 17 on a 1065, each with an attached statement.
What belongs in other current assets
Prepaid expenses are the big one, and the figure is the unexpired portion at year end rather than the amount paid. Nothing on the return computes it, so somebody has to.
Also: employee advances, refundable deposits with vendors or utilities, and receivables that are not trade receivables.
Not here: loans to owners, which have their own line, and customer deposits, which are a liability rather than a negative asset.
What belongs in other current liabilities
Accrued expenses, payroll liabilities, sales tax payable, unearned revenue, income taxes payable on a C corporation, and the current portion of anything else owed within the year that is not trade payables or debt.
Three of those are worth checking on every engagement:
Accrued expenses are the most commonly missed year end entry, because they only exist if somebody stops and thinks about them. Wages for days worked before year end, interest on shareholder loans where no lender sends a statement, utilities billed in arrears, December professional fees.
Sales tax payable should be roughly one filing period of collections. A balance much larger usually means remittances were coded to an expense account while the liability kept growing.
Unearned revenue almost never appears on a small business trial balance, because bookkeeping software records a payment as income the day it arrives. Annual contracts, deposits before work starts, retainers and gift cards all create it.
The presentation questions that come up
A credit card balance is a liability, in accounts payable or other current liabilities. It is not negative cash, and netting it against the bank balance understates both sides.
Undeposited funds belongs with cash on line 1, not in other current assets.
And the current portion of a term loan belongs on the debt line payable in less than a year, not here, which means computing it from the amortization schedule every year rather than carrying forward last year's split.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Schedule L line 6 and line 18, each with a statement |
| Form 1120S | Schedule L line 6 and line 18, each with a statement |
| Form 1065 | Schedule L line 6 and line 17, each with a statement |
Common questions
What line is other current assets on Schedule L?
Line 6 on Form 1120, Form 1120-S and Form 1065, with an attached statement listing the components. Prepaid expenses are the most common item.
What line is other current liabilities?
Line 18 on Form 1120 and Form 1120-S, and line 17 on Form 1065, each with a statement. Accrued expenses, payroll liabilities, sales tax payable and unearned revenue all land there.
Where do prepaid expenses go?
Other current assets, line 6, at the unexpired portion as of year end. That figure has to be computed; nothing on the return derives it, and books that expense the whole payment overstate the deduction in the first year.
Is a credit card balance negative cash?
No. It is a current liability, reported in accounts payable or other current liabilities. Netting it against cash understates assets and liabilities by the same amount and makes the cash balance impossible to reconcile to the bank.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.