Question

Long-term liabilities are ____________.

• A. Fixed assets minus current assets
• B. Fixed assets minus current liabilities
• C. Current assets plus current liabilities
• D. Total liabilities minus current liabilities

Answer 1

The correct option is D Total liabilities minus current liabilities

Liabilities can further be divided as current liabilities and long term liabilities.

Current liabilities are those which accrue during the business cycle and are payable within the next business cycle. These are short term liabilities and normally payable within a period of 12 months.

Long term liabilities are those which are in the business for longer period. These are arises in the business for long term purposes. Examples are long term loans, debentures etc.

Long term liabilities = Total Liabilities - Current Liabilities