What is the relationship between current liabilities and a company's operating cycle?
A) Liquidation of current liabilities is reasonably expected within the company's operating cycle (or one year if less).
B) Current liabilities are the result of operating transactions.
C) Current liabilities can't exceed the amount incurred in one operating cycle.
D) There is no relationship between the two.

Question

Quizplus · Accepted Answer

Current liabilities are debts or obligations due within one year or the company's operating cycle, whichever is longer. Therefore, it is reasonably expected that these liabilities will be liquidated within the operating cycle.

What Is the Relationship Between Current Liabilities and a Company's