Which category does not fall under current liabilities?

Which category does not fall under current liabilities?

• A. Loans due within one year
• B. Accounts payable
• C. Long-term bonds
• D. Accrued expenses

Answer: (C)

Long-term bonds do not fall under current liabilities because they are debt obligations that are set to mature beyond a one-year period. Current liabilities are typically obligations that a company expects to settle within one year, such as loans due within that timeframe, accounts payable, and accrued expenses. In contrast, long-term bonds represent financing that is meant to be repaid over a longer horizon, often several years, which is why they are classified as non-current liabilities. This distinction is significant for financial reporting and analysis, as it helps stakeholders understand the company’s short-term versus long-term financial obligations.

Long-term bonds do not fall under current liabilities because they are debt obligations that are set to mature beyond a one-year period. Current liabilities are typically obligations that a company expects to settle within one year, such as loans due within that timeframe, accounts payable, and accrued expenses.

In contrast, long-term bonds represent financing that is meant to be repaid over a longer horizon, often several years, which is why they are classified as non-current liabilities. This distinction is significant for financial reporting and analysis, as it helps stakeholders understand the company’s short-term versus long-term financial obligations.