Question

Of the following, which typically would not be classified as a current liability? Multiple Choice a. A six-month bank loan to be paid with the proceeds from the sale of common stock. . b. Rent revenue received in advance. c. A long-term noté payable maturing within the coming year

d. Estimated liability from cash rebate program

Answer 1

Among those options, choice c would typically not be classified as a current liability:

c. A long-term noté payable maturing within the coming year

The other options represent obligations that are due within a relatively short time period (within the year), so they would qualify as current liabilities:

a. A six-month bank loan to be paid with the proceeds from the sale of common stock. (Maturing within 6 months)

b. Rent revenue received in advance. (Presumably due within the year)

d. Estimated liability from cash rebate program (Would come due within the year)

So the key is that choice c represents a long-term note payable that just happens to mature within the coming year. But conceptually, it is still considered a long-term liability.

Does this help explain the reasoning? Let me know if you have any other questions!