Given a choice,most companies would prefer to report a liability as current rather than long-term,because doing so may cause the firm to appear less risky.

Question

Quizplus · Accepted Answer

The statement in the question is actually the opposite of reality. Companies prefer to report a liability as long-term because it makes the company appear less risky. Reporting it as current would indicate that the company has a large amount of debt due in the near term, which could be seen as a risk to investors or lenders. Therefore, the correct statement is: Companies prefer to report a liability as long-term, because it makes the company appear less risky.

Given a Choice,most Companies Would Prefer to Report a Liability