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Horngren'S Financial And Managerial Accounting
Found in: Page 655

Short Answer

What are the two categories of liabilities reported on the balance sheet? Provide

examples of each.

Liabilities are classified into current and long-term liabilities.

See the step by step solution

Step by Step Solution

Step 1: Definition of liabilities

Liabilities are the legal obligation or debt payable by the company.

Step 2: Two categories of liabilities

The two categories of the liabilities are current liabilities and long-term liabilities:

Current Liabilities: Current liabilities are those liabilities that become due within one year. For example- accounts payable, short-term notes payable, etc.

Long-term liabilities: Long-term liabilities are those liabilities that become due in more than one year. For example- long-term loans, bonds, notes payable, etc.

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