Question

A current liability is a debt that can reasonably be expected to be paid

a. within one year, or the operating cycle, whichever is longer.
b. between 6 months and 18 months.
c. out of currently recognized revenues.
d. out of cash currently on hand.

Answer 1

Answer: Option A

Explanation: In simple words, current liabilities refers to the obligations that are risen due to borrowings made for uses that were short term or non repetitive.

The liquidity of a company is a measurement of its ability to pay short term debt. The current liabilities are either paid in a year or in an operating cycle whichever is longer.

Hence the correct option is A.