What is a long-term liability?

What is a long-term liability?

• A. An asset used for investment.
• B. Debt that fully comes due in more than one year.
• C. An obligation paid off within one year.
• D. A current expense.

Answer: (B)

Long-term liability refers to a debt or obligation that won’t be settled within the next 12 months. This distinguishes obligations due after more than a year from those due sooner. The best choice describes debt that must be paid off entirely in more than one year, such as a mortgage, a long-term loan, or bonds. These are typically shown as non-current liabilities on the balance sheet, signaling funding that extends over a longer horizon and affecting long-term solvency rather than immediate liquidity. An asset used for investment isn’t a liability, an obligation paid off within one year is a current liability, and a current expense is not a liability. If part of a long-term debt becomes due within the next year, that portion is called the current portion, while the remainder stays as a long-term liability.

Long-term liability refers to a debt or obligation that won’t be settled within the next 12 months. This distinguishes obligations due after more than a year from those due sooner. The best choice describes debt that must be paid off entirely in more than one year, such as a mortgage, a long-term loan, or bonds. These are typically shown as non-current liabilities on the balance sheet, signaling funding that extends over a longer horizon and affecting long-term solvency rather than immediate liquidity. An asset used for investment isn’t a liability, an obligation paid off within one year is a current liability, and a current expense is not a liability. If part of a long-term debt becomes due within the next year, that portion is called the current portion, while the remainder stays as a long-term liability.