[p 400-406]. Some obligations are due to be paid within one year or the company\

Question

[p 400-406]. Some obligations are due to be paid within one year or the company's operating cycle, "whichever is longer," and usually one year is longer than the operating https://iu.instructure.com/courses/1660325/quizz cycle. For instance, the operating cycle of a clothing store is about 3 months corresponding to the seasons; It sells summer clothes, then fall clothes, then winter clothes, then spring clothes. The operating cycle of a heating and air conditioning company is about 6 months; it sells air conditioners for summer and space heaters for winter, then starts all over. For most purposes, one year will be equal to or longer than the operating cycle for a company, so we simply default to one year as the dividing line between current and long-term liabilities.] Obligations that come due within one year (or less) are called. O Reverse liabilities o Long term liabilities O Current liabilities O Earned revenues

Explanation / Answer

Obligations that come due within one year(or less) are called Current liabilities Option 3 is correct

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