What do we call debts owed by a business that are repayable within twelve months and those repayable over longer periods?

What do we call debts owed by a business that are repayable within twelve months and those repayable over longer periods?

• A. Assets
• B. Debtors
• C. Expenses
• D. Liabilities

Answer: (D)

In accounting, debts a business must pay in the future are called liabilities. These are obligations the company owes and will settle, typically shown on the balance sheet. They’re split into two timing categories: those due within twelve months (current liabilities) and those due over longer periods (long-term or non-current liabilities). The question asks for the term that covers both, which is liabilities. For contrast, assets are what the business owns, debtors are amounts owed to the business (receivables), and expenses are costs incurred.

In accounting, debts a business must pay in the future are called liabilities. These are obligations the company owes and will settle, typically shown on the balance sheet. They’re split into two timing categories: those due within twelve months (current liabilities) and those due over longer periods (long-term or non-current liabilities). The question asks for the term that covers both, which is liabilities. For contrast, assets are what the business owns, debtors are amounts owed to the business (receivables), and expenses are costs incurred.