Question

Which of the following items are normally classified as current liabilities for a company that has a one-year operating cycle?1. Note payable due in 18 months.
2. Note payable maturing in 2 years.
3. Portion of long-term note due in 15 months.
4. Salaries payable.
5. FICA taxes payable.
6. Note payable due in 11 months.

Answer 1

Answer:

4. Salaries payable.

5. FICA taxes payable.

6. Note payable due in 11 months.

Explanation:

Current liabilities are debts that the company must pay within one operation period, which is generally one year.

The note payable is due in 11 months, and both salaries and FICA taxes must be paid even sooner (usually during the current month).

Notes payable that are due 15, 18 or 24 months from now are long term liabilities.