Decrease in current liability indicates

Here are some examples of current liabilities:

• Accounts payable: Money that a company owes to its suppliers for goods or services that it has purchased on credit.
• Accrued expenses: Expenses that have been incurred but not yet paid, such as salaries or interest.
• Short-term debt: Debt that is due within one year.

When a company pays off its accounts payable, it reduces its current liability and increases its cash balance. Similarly, when a company accrues expenses, it increases its current liability and decreases its cash balance. And when a company pays off its short-term debt, it reduces its current liability and increases its cash balance.

In conclusion, a decrease in current liability indicates an inflow of cash. This is because a liability is a company’s legal obligation to pay money to another party. When a liability decreases, it means that the company has either paid off the debt or reduced its obligation. Either way, this results in an inflow of cash.