Which of the following statements BEST describes the difference between current and long-term liabilities?
A) Current liabilities are debts that need to be paid immediately, whereas long-term liabilities do not.
B) Current liabilities are those which will cost less in debt interest than long-term liabilities.
C) Current liabilities are debts that are settled sooner than long-term debts.
D) Current liabilities are debts on tangible assets, whereas long-term liabilities are debts on intangible assets.
E) Current liabilities are debts on current assets, whereas long-term liabilities are debts on fixed and intangible assets.
Answer: C
Explanation: C) Current liabilities include accounts payable: unpaid bills to suppliers for materials as well as wages and taxes that must be paid in the coming year. Long-term liabilities are debts that are not due for at least a year.
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