Most companies pay current liabilities
A) out of current assets.
B) by issuing shares.
C) by issuing interest-bearing notes payable.
D) by creating long-term liabilities.

Question

Quizplus · Accepted Answer

Current liabilities are debts or obligations that are due within a year, and they are usually paid off using current assets, such as cash, accounts receivable, or inventory. Option B is incorrect as issuing shares is a way to raise capital, not to pay off liabilities. Option C may be a way to pay off a liability, but it does not fall under the category of current liabilities. Option D is also incorrect as creating long-term liabilities would not be a suitable method to pay off current liabilities.

Most Companies Pay Current Liabilities