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.Companies prefer to report a liability as long-term,because long-term debt makes a company appear less risky.

Question

Quizplus · Accepted Answer

The statement in the question is actually reversed. Companies prefer to report a liability as long-term because it makes the company appear less risky, not current. Reporting a liability as current would indicate that the company has a shorter timeframe to pay it off, which could be seen as more risky.

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