A firm classifies liabilities which fall due after the operating cycle, usually greater than one year, as
A)a current liability.
B)a long-term asset.
C)a noncurrent liability.
D)part of shareholders' equity.
E)contingent liability.

Question

Quizplus · Accepted Answer

Liabilities that fall due after the operating cycle, usually greater than one year, are classified as noncurrent liabilities. This is because they are not expected to be settled within the current operating cycle of the company or within the next 12 months. Current liabilities are obligations that are expected to be settled within the current operating cycle or within the next 12 months. Long-term assets are not related to liabilities and are assets that are held for more than one year. Shareholders' equity is not related to liabilities and represents the residual value of assets after all liabilities have been paid off. Contingent liabilities are potential liabilities that are dependent on the occurrence of a future event and are not recognized as actual liabilities on the balance sheet until the event occurs.

A Firm Classifies Liabilities Which Fall Due After the Operating