Question

Depending on the length of time, liabilities will either be categorized as current or long-term. Go to Yahoo Finance and select a company. Then, share either a current or long-term liability of the company and the type’s characteristics.

Answer 1

Yes, the liabilities are classified as current or long term liabilities based on the maturity date.

If any liability is maturing in a period of less than one year then it is to be treated as a current liability and if it is maturing in a period of more than 1 year then this is to be treated as a non-current liability.

Some of the examples are as below

Long term liabilities

1. Convertible debts, they are long term because they are usually not converted in the same year in which they are issued
2. Bonds, they are mostly issued for a period ranging from 5 to 10 years.
3. Mortgage, this is a type of loan that has been issued on security of an asset and hence this is for a long duration.
4. Lease obligation or contracts, leases contracts are generally made for a period ranging from 15 to 20 years.

Current liabilities

All of the below liabilities are incurred in day to day business and are generally paid in short period of time.

There amounts are also not generally  that much high.

1. Short term loan
2. Wages outstanding
3. Accounts payable [ invoices of supplier]
4. Income tax or government tax payable.
5. Rent payment