If the firm expects to collect or pay more than one year after the balance sheet date, the balance sheet classifies these as noncurrent assets and noncurrent liabilities, respectively.

Question

Quizplus · Accepted Answer

This is a correct statement according to accounting principles. Noncurrent assets and liabilities are defined as those that are not expected to be converted to cash or paid off within the next year. If a firm expects to collect or pay something that extends beyond one year, it will be classified as noncurrent on the balance sheet.

If the Firm Expects to Collect or Pay More Than