Multiple Choice
A bond indenture is:
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9. Current Liabilities
Types of Liabilities
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Liabilities that are due within one year (or the company’s operating cycle if longer) are:
A
Current liabilities
B
Contingent liabilities
C
Long-term liabilities
D
Deferred liabilities
Verified step by step guidance1
Understand the definition of current liabilities: These are obligations that a company expects to settle within one year or within its operating cycle, whichever is longer. Examples include accounts payable, short-term loans, and accrued expenses.
Review the definition of contingent liabilities: These are potential obligations that depend on the outcome of a future event, such as lawsuits or guarantees. They are not necessarily due within one year.
Understand long-term liabilities: These are obligations that are not due within one year or the operating cycle. Examples include bonds payable and long-term loans.
Learn about deferred liabilities: These are liabilities that are not immediately due and are often associated with deferred tax liabilities or other long-term obligations.
Compare the definitions and identify that liabilities due within one year (or the operating cycle if longer) are classified as current liabilities.
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