Which accounts are included in long term liabilities?

Which accounts are included in long term liabilities?

• A. Bonds payable, long term notes payable
• B. Accounts payable, accrued expenses
• C. Short-term investments, cash equivalents
• D. Common stock, retained earnings

Answer: (A)

Long-term liabilities are obligations that won’t be settled within one year (or the operating cycle). Bonds payable and long-term notes payable fit this category because their maturities extend beyond the next year, so they are reported in the long-term liabilities section. In contrast, accounts payable and accrued expenses are due soon, making them current liabilities. Short-term investments and cash equivalents are assets, not liabilities, and common stock and retained earnings are part of stockholders’ equity. So bonds payable and long-term notes payable correctly identify long-term liabilities.

Long-term liabilities are obligations that won’t be settled within one year (or the operating cycle). Bonds payable and long-term notes payable fit this category because their maturities extend beyond the next year, so they are reported in the long-term liabilities section. In contrast, accounts payable and accrued expenses are due soon, making them current liabilities. Short-term investments and cash equivalents are assets, not liabilities, and common stock and retained earnings are part of stockholders’ equity. So bonds payable and long-term notes payable correctly identify long-term liabilities.