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19 June, 05:00

The currently maturing portion of long-term debt should be classified as a current liability if funds used to liquidate it are

a. currently classified as a long-term asset.

b. the debt is to be converted into common stock.

c. the portion so classified will be liquidated within one year using current assets.

d. the debt is to be refinanced on a long-term basis.

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Answers (1)
  1. 19 June, 05:10
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    c. the portion so classified will be liquidated within one year using current assets.

    Explanation:

    Current liabilities are debts of a business that are due for payment with the current financial year. Examples of current liabilities include dividends declared, accounts payables, short term debts, and long term debts maturing within the currents financial year.

    A business uses current assets to meet its current liabilities. Current assets include cash at bank, marketable securities, short-term investments, and account receivables. Business monitors current liabilities to ensure it has sufficient current assets to pay for current liabilities. If need be, a company may liquidate its current assets such as marketable securities to pay current liabilities.
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