What are the two categories of liabilities reported on the balance sheet?

Question: What are the two categories of liabilities reported on the balance sheet? Provide examples of each.

Expert Solution

Step 1: Definition of liabilities

Liabilities are the expenses for which a company is liable.

Step 2: Two categories of liabilities

The two categories of the liabilities are current liabilities and long-term liabilities:

Current Liabilities: Current liabilities are those liabilities that become due within one year. For example- accounts payable, short-term notes payable, etc.

Long-term liabilities: Long-term liabilities are those liabilities that become due in more than one year. For example- long-term loans, bonds, notes payable, etc.

A bond is a long-term liability that is issued by the company to fulfill its money needs.

Sahil Dangi answered 2 years ago

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