In most companies, current liabilities are paid within
A) one year through the creation of other current liabilities.
B) the operating cycle through the creation of other current liabilities.
C) one year out of current assets.
D) the operating cycle out of current assets.

Question

Quizplus · Accepted Answer

Current liabilities are obligations that need to be paid within a year. The usual practice in most companies is to pay off current liabilities within the period through the utilization of current assets. Thus, choice C is the best answer as it correctly states that current liabilities are paid within one year out of current assets.

In Most Companies, Current Liabilities Are Paid Within