Which term describes debts repayable over a period longer than twelve months?

Which term describes debts repayable over a period longer than twelve months?

• A. Long-term liabilities
• B. Current assets
• C. Expenses
• D. Revenues

Answer: (A)

The main idea here is how liabilities are classified by when they must be repaid. Debts that are repayable over a period longer than twelve months are called long-term liabilities. On a balance sheet, these are shown separately from current liabilities, which are obligations due within the next year. Examples include long-term bank loans, bonds payable, or a mortgage. This is the most accurate label for debts with a repayment horizon beyond one year. Current assets, expenses, and revenues describe other parts of financial statements: current assets are items that will be converted to cash within a year, while expenses and revenues relate to the income statement and don’t describe debts.

The main idea here is how liabilities are classified by when they must be repaid. Debts that are repayable over a period longer than twelve months are called long-term liabilities. On a balance sheet, these are shown separately from current liabilities, which are obligations due within the next year. Examples include long-term bank loans, bonds payable, or a mortgage.

This is the most accurate label for debts with a repayment horizon beyond one year. Current assets, expenses, and revenues describe other parts of financial statements: current assets are items that will be converted to cash within a year, while expenses and revenues relate to the income statement and don’t describe debts.