Identify the Classifications of the Following Accounts as Either Current

question 31

Multiple Choice

Identify the classifications of the following accounts as either current or long-term liabilities for the December 31, 2014 balance sheet.
-An amount of money owed for years 2016 to 2020 to a creditor as annual installment payments on a ten-year note, due June 30, 2020.

• A)Current liability
• B)Long-term liability

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Definitions:

Rate of Interest

The percentage of a loan amount charged for borrowing money, expressed as an annual percentage of the principal.

Cash Discount

A reduction in the price paid for goods or services if payment is made in cash or within a certain time period.

Balance Sheet Hedge

A financial strategy used to limit or offset the risk of currency exchange rate fluctuations affecting a company's balance sheet.

Exchange Rates

The value of one currency for the purpose of conversion to another.