Which liability category includes obligations due in more than a year?

Which liability category includes obligations due in more than a year?

• A. Long-Term Liabilities
• B. Current Liabilities or Short-Term Liabilities
• C. Bank Debt
• D. Accounts Payable

Answer: (A)

Liabilities are sorted by when they must be paid. If an obligation isn’t due in the next 12 months, it goes into long-term liabilities. This group includes things like mortgages, long-term loans, and bonds that are scheduled to be paid back after more than a year. In contrast, current or short-term liabilities are obligations due within one year, such as accounts payable, short-term notes payable, and accrued expenses. Bank debt can be either long-term or short-term depending on the loan’s term, but when an obligation is due in more than a year, it belongs in long-term liabilities. Accounts payable is typically due soon, so it is a current liability.

Liabilities are sorted by when they must be paid. If an obligation isn’t due in the next 12 months, it goes into long-term liabilities. This group includes things like mortgages, long-term loans, and bonds that are scheduled to be paid back after more than a year. In contrast, current or short-term liabilities are obligations due within one year, such as accounts payable, short-term notes payable, and accrued expenses. Bank debt can be either long-term or short-term depending on the loan’s term, but when an obligation is due in more than a year, it belongs in long-term liabilities. Accounts payable is typically due soon, so it is a current liability.