Q8RQ - Horngren'S Financial And Managerial Accounting

Question

Identify two liability categories on the classified balance sheet, and give examples of each category.

Step-by-Step Solution

Answer

Current liabilities includes accounts payable, salaries payable, interest payable and so on. Long term liabilities includes long term notes payable, bonds, long term debts etc. 

Step-by-Step-Solution Step 1: Explanation on Classified balance sheet

Classified balance sheet is type of balance sheet which places the assets and liabilities as per the specific category.

Step 2: Explanation on Categories of Liabilities

Current liabilities are the obligations which are required to be paid within a year or within an operating cycle, whereas non- current liabilities are paid in longer tenure such as more than a year or operating cycle.