A current liability is a debt the company reasonably expects to pay from existing current assets within
A) one year.
B) the operating cycle.
C) one year or the operating cycle whichever is longer.
D) one year or the operating cycle whichever is shorter.

Question

Quizplus · Accepted Answer

A current liability is a debt that is expected to be paid within one year or the operating cycle, whichever is longer. The operating cycle is the time it takes for a company to purchase inventory, sell it, and collect payments from customers. Since the operating cycle can be longer than one year, it is important to include it as a consideration when determining whether a liability is current or long-term.

A Current Liability Is a Debt the Company Reasonably Expects