The distinction between current and non-current liabilities is based on: Group of answer choices 1.when the liability will be settled. 2.the size of the liability. 3.the type of liability. 4.their obligation.
Question
The distinction between current and non-current liabilities is based on: Group of answer choices
1.when the liability will be settled.
2.the size of the liability.
3.the type of liability.
4.their obligation.
Solution
The distinction between current and non-current liabilities is based on:
- When the liability will be settled.
Current liabilities are obligations that a company expects to pay off within one year or within one operating cycle, whichever is longer. These may include accounts payable, accrued liabilities, short-term loans, etc.
Non-current liabilities, on the other hand, are obligations that are due beyond one year or one operating cycle. These may include long-term loans, bonds payable, deferred tax liabilities, etc.
So, the primary difference between current and non-current liabilities is the time frame within which the liability is expected to be settled.
Similar Questions
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