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Which of the following is a characteristic of a current liability?

A current liability is due within one year or one operating cycle, whichever is longer.

A current liability must be of a known amount.

A current liability must be of an estimated amount.

Current liabilities are subtracted from long-term liabilities on the balance sheet.

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smiley1599

Hey Friend.

A is the answer.

Current liability represent debts that will be repaid within a year. e. g. Accounts payable (creditor), bank overdraft, expenses owing, prepaid revenue.

vaduz

The statement "A current liability is due within one year or one operating cycle, whichever is longer" is a characteristic of a current liability.

Current liabilities refers to the short term financial obligations that companies have to settle in a specific amount of time. In short, we can say that it is all the liabilities that a company has to take care of in a given time.

  • Current liabilities cover a duration of one year or one operating cycle, whichever is longer.
  • Generally, it covers one fiscal year to settle the liabilities.

The liabilities that a company must settle are known as current liabilities. Such type of liabilities are due within a single year or one operating cycle, whichever is longer. Thus, the correct answer is the first option.

Learn more about current liability here:

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