Discuss current liabilities and long-term liabilities. What are the differences between the two? Illustrate your understanding of liabilities, making sure to identify major types of current liabilities. Respond to at least two of your classmates’ posts.
According to Kimmel (2011) liabilities are, "creditors' claims on total assets and as existing debts and obligations" (p. 506). Furthermore, liabilities are debts that a company must settle/pay by either transferring assets or services. However in relation to determining the difference between current liabilities and long-term liabilities, the future maturity date is are important. A current liability is a debt that is expected to be paid by (1) existing current assets or creation of other current liabilities, and (2) within a one-year or operating cycle--whichever is longer. Finally, debts that will not meet the two preceding criteria are to be long-term liabilities (Kimmel, Weygandt, & Kieso, 2011, p. 506).
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