Question

The mortgage on Prudential Insurance's local facility will be paid off over the next 30 years.

The majority of this mortgage would be classified on Prudential's balance sheet as a(n):

a) current asset.
b) current liability.
c) long-term asset.
d) long-term liability.
e) account payable.

Answer 1

(d)

Step-by-step explanation:

A liability is an obligation resulting from a previous event that is not due within one year of the date of the balance sheet.

On a balance sheet liabilities are categorised into current and long term liabilities.

An example of a long term liability is a long term loan, and a mortgage is an example of a long term loan, since it will take the next 30 years to pay off the mortgage.

Other examples of long term liability are bonds payable, pension liabilities, custormer deposits.