Current liability: Current liability refers to the debts of an organization. It is an obligation of the company that is due to be paid within one year.
Long-term debt: Long-term debt refers to the obligations of a firm that are due and has a due period exceeding a year.
To determine the difference between current liability and long-term debt.
Explanation of Solution
Both current liabilities and long-term debts act as a focal point of the financial planning efforts of an organization.
Current liabilities are obligations to be paid within a year. If the debts are paid within the stipulated period, the short-term liability of the company is found to be positive. This means that the company meets the
Long-term debts are obligations for which the due period exceeds 1 year. If the debts are paid within the stipulated period, the long-term liquidity of the company will be positive. The probability of meeting the financial needs of the company turns to be favourable.
Hence, the difference between current liability and long-term debt are explained above.
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Chapter 13 Solutions
Intermediate Accounting, 17e Rockford Practice Set
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