Which term describes debts due within the next 12 months?

Which term describes debts due within the next 12 months?

• A. Current Liabilities
• B. Non-Current Liabilities
• C. Owner's Equity
• D. Assets

Answer: (A)

Debts due within the next 12 months are described as current liabilities. In accounting, the balance sheet separates items into assets, liabilities, and owners’ equity. Current liabilities are short-term obligations that the business expects to settle within one year (or the operating cycle, if longer). They include things like accounts payable, short-term borrowings, and accrued expenses. This is why they’re the term that fits “debts due within the next 12 months.” Non-current liabilities are longer-term obligations, due after 12 months. Owner's equity represents the owners’ claim on the business after debts, not obligations the business must pay. Assets are resources controlled by the business.

Debts due within the next 12 months are described as current liabilities. In accounting, the balance sheet separates items into assets, liabilities, and owners’ equity. Current liabilities are short-term obligations that the business expects to settle within one year (or the operating cycle, if longer). They include things like accounts payable, short-term borrowings, and accrued expenses. This is why they’re the term that fits “debts due within the next 12 months.”

Non-current liabilities are longer-term obligations, due after 12 months. Owner's equity represents the owners’ claim on the business after debts, not obligations the business must pay. Assets are resources controlled by the business.