Which term describes debts that will be repaid after more than 12 months?

Which term describes debts that will be repaid after more than 12 months?

• A. Non-Current Liabilities
• B. Current Liabilities
• C. Current Assets
• D. Revenue

Answer: (A)

Debts that will be repaid after more than 12 months are classified as non-current liabilities. This labeling on the balance sheet shows longer-term financial commitments, distinct from debts due within the next year. For example, a bank loan or mortgage that isn’t due for several years sits under non-current liabilities, highlighting the business’s long-term financing. In contrast, debts owed within 12 months—such as accounts payable or short-term borrowings—are current liabilities, and items expected to be converted into cash within a year belong to current assets. Revenue is income earned from operations and is not a liability at all.

Debts that will be repaid after more than 12 months are classified as non-current liabilities. This labeling on the balance sheet shows longer-term financial commitments, distinct from debts due within the next year. For example, a bank loan or mortgage that isn’t due for several years sits under non-current liabilities, highlighting the business’s long-term financing. In contrast, debts owed within 12 months—such as accounts payable or short-term borrowings—are current liabilities, and items expected to be converted into cash within a year belong to current assets. Revenue is income earned from operations and is not a liability at all.