Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Under the classification of liabilities, mortgages are best described as which type of liability?

Long-term liabilities

Accrued expenses

Contingent liabilities

Current liabilities

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Verified step by step guidance

Understand the definition of a mortgage: A mortgage is a loan secured by real property, typically used to purchase real estate, and is repaid over a long period of time.

Review the classification of liabilities: Liabilities are categorized into current liabilities (due within one year) and long-term liabilities (due after one year).

Analyze the nature of a mortgage: Since mortgages are typically repaid over several years, they are not considered current liabilities unless the portion due within the next year is specifically identified.

Eliminate incorrect options: Accrued expenses are short-term obligations, contingent liabilities depend on uncertain future events, and current liabilities are due within one year. These do not align with the nature of a mortgage.

Conclude that mortgages are classified as long-term liabilities because they are obligations that extend beyond one year, except for the portion due within the next year, which may be classified as a current liability.