The current portion of long-term debt should be
A) removed from the long-term portion of debt with a journal entry.
B) classified as a current liability on the statement of financial position.
C) classified as a long-term liability on the statement of financial position.
D) paid immediately.

Question

Quizplus · Accepted Answer

The current portion of long-term debt represents the amount of the long-term debt that is due within one year. Therefore, it should be classified as a current liability on the statement of financial position. Option A is incorrect because removing the current portion of long-term debt with a journal entry would not accurately reflect the company's financial position. Option C is incorrect since the long-term portion of the debt should be reported separately from the current portion. Option D is incorrect because the current portion of long-term debt is not due immediately, but rather within the next year.

The Current Portion of Long-Term Debt Should Be