Multiple Choice
Which of the following liabilities is typically amortized over its useful life?
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9. Current Liabilities
Types of Liabilities
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Zachary's student loans are an example of which type of liability?
A
Deferred revenue
B
Current liability
C
Long-term liability
D
Contingent liability
Verified step by step guidance1
Understand the concept of liabilities: Liabilities are obligations that a company or individual owes to others, typically involving the transfer of money, goods, or services in the future.
Learn about the types of liabilities: Liabilities are categorized into current liabilities (due within one year), long-term liabilities (due after one year), deferred revenue (money received for goods or services not yet delivered), and contingent liabilities (potential obligations dependent on future events).
Analyze the nature of student loans: Student loans are typically obligations that are repaid over a period longer than one year, making them a long-term liability.
Compare the options provided: Deferred revenue refers to unearned income, current liabilities are short-term obligations, and contingent liabilities depend on uncertain future events. None of these accurately describe student loans.
Conclude that student loans are classified as long-term liabilities because they are financial obligations that extend beyond one year.
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