Which of the following statements about current liabilities is true?
A)Current liabilities are listed in order of decreasing amounts in the current liability section of a classified balance sheet.
B)The amount of current liabilities has little implication for a company's liquidity.
C)Current liabilities are the denominator in the formula for the current ratio.
D)The current liabilities section of a classified balance sheet will never contain any portion of long-term liabilities.

Question

Quizplus · Accepted Answer

Current liabilities are included in the current ratio calculation, which compares a company's current assets to its current liabilities to measure its ability to meet short-term obligations. The other statements are false. Current liabilities are listed in order of maturity, not amount, and their amount is a significant factor in measuring a company's liquidity. The current liability section of a classified balance sheet may include portions of long-term liabilities that are due within the next year, such as the current portion of a long-term debt.

Which of the Following Statements About Current Liabilities Is True