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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On a balance sheet, what is the difference between Current Liabilities and Long-Term Liabilities? Give an example of an account in each classification.

To determine

Explain the difference between the current and long-term liabilities, and indicate an example for each classification.

Explanation

Liabilities: The claims creditors have over assets or resources of a company are referred to as liabilities. These are the debt obligations owed by company to creditors. Liabilities are classified on the balance sheet as current liabilities and long-term liabilities.

Current liabilities: The debt obligations owed by a company to creditors and suppliers and are to be paid within a year are referred to as current liabilities.

Long-term liabilities: The debt obligations owed by a company to creditors and suppliers and could be paid in more than a year are referred to as long-term liabilities...

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