Final answer:
The item that is not a current liability is b. 'Note payable due in 5 years'. Current liabilities are debts or obligations due within one year, and this note's due date lies beyond that period.
Step-by-step explanation:
The question is asking to identify which item mentioned is not a current liability. By definition, current liabilities are obligations that a company expects to pay within one year or one operating cycle, whichever is longer. The choices offered in the question are:
- Sales Tax payable
- Note payable due in 5 years
- Accounts Payable
- Taxes Payable
The correct answer to this question is Note payable due in 5 years. Explanation for each:
- Sales Tax payable - is a current liability because it is usually due within the next 12 months.
- Note payable due in 5 years - is not a current liability because its due date is beyond the one-year threshold.
- Accounts Payable - represents money owed to suppliers, typically due within 30-90 days, making it a current liability as well.
- Taxes Payable - are also current liabilities because they generally need to be settled within the operating cycle or the fiscal year.