Question

How are long-term liabilities accounted for in comparison to short-term liabilities?

1) They are recorded in the same way
2) They are recorded differently
3) They are not recorded at all
4) Cannot be determined

Answer 1

Long-term liabilities and short-term liabilities are accounted for differently in financial statements.

Step-by-step explanation:

Long-term liabilities and short-term liabilities are accounted for differently in financial statements.

Long-term liabilities are obligations that are due to be repaid or settled after one year or more. Examples include long-term loans, bonds payable, and mortgage payable. These liabilities are recorded on the balance sheet under the long-term liabilities section.

Short-term liabilities, on the other hand, are obligations that are due to be repaid or settled within one year. Examples include accounts payable, short-term loans, and current portion of long-term debt. These liabilities are recorded on the balance sheet under the current liabilities section.

Therefore, option 2) They are recorded differently is the correct answer.