Short-term loans are best described by which of the following?
A) They are always secured.
B) They have a maturity of one year or longer.
C) They do not require any collateral.
D) They are shown as a liability on the balance sheet.

Question

Quizplus · Accepted Answer

Short-term loans are liabilities because they represent money that the company owes and must repay, typically within a year, and thus are recorded on the balance sheet as such. The other options are incorrect because short-term loans can be either secured or unsecured (not always secured), and their defining feature is a maturity of less than one year (not one year or longer).

Short-Term Loans Are Best Described by Which of the Following