Current liabilities are defined as
A)obligations that will be paid by refinancing through issuing new long-term liabilities
B)obligations that will be paid by using existing resources properly classified as current assets
C)obligations that will be paid out of a fund classified as a long-term investment
D)obligations that will be paid by using existing resources, regardless of their classification

Question

Quizplus · Accepted Answer

Current liabilities are obligations that will be paid by using existing resources properly classified as current assets. This means that they will be paid out of assets that are expected to be converted into cash within the next operating cycle or within one year, whichever is longer. Refinancing through issuing new long-term liabilities or using a long-term investment fund to pay current liabilities would not meet this definition. Therefore, option B is the best choice.

Current Liabilities Are Defined as