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Current Liability:
Current liabilities are the short term obligations due to an organization. They are generally due for a year or within the normal operating cycle of business. They are shown in
To identify: Whether items are current liabilities or not
Explanation of Solution
1.
Portion of long term notes due in 15 months is a current liability.
Portion of long term notes due is payable within 15 months. Company’s operating cycle is of 15 months. So it is payable within company’s operating cycle. So it is a current liability.
Thus, portion of long term notes is a current liability.
2.
Note Payable maturing in 2 years. is a non-current liability
Portion of note payable maturing in 2 years is a non-current liability. Company’s operating cycle is of 15 months. It is not payable within company’s operating cycle or within one year. So it is a non-current liability.
Thus, note payable maturing in 2 years. is a non-current liability
3.
Note payable due in 18 months. is a non-current liability.
Note payable due in 18 months is a non-current liability. Company’s operating cycle is of 15 months. It is not payable within company’s operating cycle or within one year. So it is a non-current liability
Thus, note payable due in 18 months. is a non-current liability.
4.
Note payable due in 11 months. is a current liability.
Note payable due in 11 months is a current liability. Company’s operating cycle is of 15 months. It is payable within company’s operating cycle or within one year. So it is a current liability
Thus, note payable due in 11 months. is a current liability.
5.
FICA taxes payable. is a current liability
Taxes are generally payable within 1 year. This is company’s obligation towards government. So, it is a current liability
Thus, FICA taxes payable is a current liability.
6.
Salaries payable is a current liability
Salary due is payable within one year. This is company’s obligation towards employees. So, it is a current liability
Thus, salaries payable is a current liability.
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