The purpose of dividing assets and liabilities into current and noncurrent classes is to help the reader of the balance sheet to determine:
A) the short-term financial position of the firm
B) the long-term financial position of the firm
C) the likely future financial performance of the firm
D) none of the above.

Question

Quizplus · Accepted Answer

Dividing assets and liabilities into current and noncurrent classes helps the reader of the balance sheet to determine the short-term financial position of the firm. Current assets and liabilities are those that are expected to be converted to cash or paid within one year, while noncurrent assets and liabilities are those that will last longer than one year. This information is important for assessing a company's ability to meet its short-term obligations and manage its cash flow.

The Purpose of Dividing Assets and Liabilities into Current and Noncurrent