Question

Which of the following items are normally classified as current liabilities for a company that has a one-year operating cycle? (You may select more than one answer.

a. Note payable due in 18 months.
b. Bank debt due in 5 years.
c. Loan due in 18 months.
d. Portion of long-term note due in 1 month.
e. Portion of long-term note due in 10 months.
f. Wages payable due in 7 days.

Answer 1

The correct answer are D, E and F

Step-by-step explanation:

Current liabilities are the short-term obligations of the company or the business which are due within the period of one year or within a operating cycle. An operating cycle states the cash conversion cycle, which is the time taken by the company to purchase the inventory and then convert the inventory into cash through sales.

The items which can be classified as Current Liabilities are portion of the long term note which is due in 1 month, wages payable due in 7 days and portion of the long term note which is due in 10 months.