A current liability is a debt that is reasonably expected to be paid
A) between 6 months 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 defined as a debt that is expected to be paid within one year or the operating cycle of the business, whichever is longer. This includes obligations that arise from past transactions or events and require the use of current assets or the creation of other current liabilities to settle. Options A and B are too specific, and option D is not accurate as current liabilities can be paid out of other assets besides cash on hand.

A Current Liability Is a Debt That Is Reasonably Expected