Which of the following statements regarding liabilities is true?
A) Liabilities are generally classified according to maturity.
B) Most loans fall into the category of short-term liabilities.
C) Future interest payments are accounted for separately as long-term liabilities on the balance sheet.
D) All liabilities should be recorded on the balance sheet at their current fair market value.
E) Whether or not a liability must be repaid in the future depends on its source.

Question

Quizplus · Accepted Answer

Liabilities are generally classified according to maturity, with short-term liabilities due within one year and long-term liabilities due after one year.

(B) is incorrect because loans can be short-term or long-term, depending on their maturity.

(C) is incorrect because interest payments are typically included as part of the liability and not separately accounted for.

(D) is incorrect because liabilities are typically recorded at their historical cost, not their fair market value.

(E) is incorrect because all liabilities must be repaid in the future, regardless of their source.

Which of the Following Statements Regarding Liabilities Is True