A Company Can Exclude a Short-Term Obligation from Current Liabilities

question 58

True/False

A company can exclude a short-term obligation from current liabilities if it intends to refinance the obligation and has an unconditional right to defer settlement of the obligation for at least 12 months following the due date.

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Definitions:

Orders

Directions or commands given by authority, or customer requests for goods or services.

Revolving Line

A type of credit facility that allows a borrower to withdraw, repay, and re-borrow funds up to a specified credit limit.

Commitment Fee

A charge imposed by a lender on a borrower for not utilizing a credit line or for funds that have not been disbursed.

Revolving Credit

A flexible credit line that allows individuals or businesses to borrow, repay, and borrow again up to a certain limit, commonly seen in credit cards and lines of credit.