Current Liabilities Are Debts of the Firm That Will Be

question 3

Multiple Choice

Current liabilities are debts of the firm that will be due within:

• A) three months.
• B) six months.
• C) one year.
• D) two years.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle if longer.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered or used, but not yet paid for.

Prepaid Expenses

Payments made for goods or services to be received in the future, recognized as assets on the balance sheet until they are incurred.

Journal Entry

A record of financial transactions in the accounting books of a business, indicating the accounts affected and the amounts.