Textbook Problem

What is long-term debt?

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

To explain:

The meaning of Long Term Debt.

Answer to Problem 1DQ

A long term debt is a loan taken for a period which is more than 12 months.

Explanation of Solution

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period /years, for example long term loan.

A long term debt is a loan taken for a period which is more than 12 months.