In a pro forma balance sheet, what would be considered a non-current liability? A. Long-term loans B. Accounts payable C. Salaries payable D. Rent expense
Question
In a pro forma balance sheet, what would be considered a non-current liability? A. Long-term loans B. Accounts payable C. Salaries payable D. Rent expense
Solution
A. Long-term loans would be considered a non-current liability on a pro forma balance sheet. Non-current liabilities, also known as long-term liabilities, are obligations not due within the next 12 months or the company's operating cycle if it's longer than a year. They are often payable over the long term. Examples include bonds payable, long-term loans, capital leases, pension liabilities, and deferred compensation.
In contrast, B. Accounts payable, C. Salaries payable, and D. Rent expense are typically considered current liabilities because they are obligations due to be paid within one year.
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