What is a current liability Distinguish between a current liability.pdf
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Current liabilities are obligations due within one accounting cycle, such as accounts payable and short-term loans. In contrast, long-term debts are obligations that arise after one accounting cycle, typically after 12 months, and are non-recurring. This distinction highlights the timing and nature of the liabilities.
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What is a current liability Distinguish between a current liability.pdf
- 1. What is a current liability? Distinguish between a current liability and a long term debt. Solution Current liabilities are those liabilities which become due or obligation are to be meet within a(one) normal accounting cycle. Examples of current liabilities are accounts payable, expenses payable, short term loans, etc Difference:- Current liabilities becomes due or obligation are to be made within a(one) accounting cycle and these are also recurring in nature. But long term debts are debts which becomes due or obligation for payment arises after a period of one accounting cycle i.e.after 12 months, and these are non reccurring in nature.