A current liability is a debt that is reasonably expected to be paid
A) between 6 and 18 months
B) out of currently recognized revenues
C) within one year
D) out of cash currently on hand

Question

Quizplus · Accepted Answer

A current liability is a debt that is expected to be paid within one year from the date of the balance sheet or within the company's operating cycle, whichever is longer. Option A is partially correct as some current liabilities may be due within 6 months, while option B is not accurate as the payment of current liabilities does not necessarily depend on recognized revenues. Option D is not true as a company may need to raise additional cash by borrowing or other means to pay its current liabilities.

A Current Liability Is a Debt That Is Reasonably Expected