Which of the following items is a current liability?
A) Bonds due in three months (for which there is an adequate sinking fund classified as a long-term investment).
B) Bonds due in three years.
C) Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months.
D) Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue.

Question

Quizplus · Accepted Answer

Current liabilities are obligations due within one year. The bonds due in eleven months (for which there is an adequate appropriation of retained earnings) would be classified as a current liability. The sinking fund for the bonds due in three months and the fact that there is no doubt about the marketability of the refunding issue for the bonds due in eight months do not affect the classification of these items as long-term liabilities. The bonds due in three years are also long-term liabilities.

Which of the Following Items Is a Current Liability