Which of the following statements is true?

A) If any portion of a non-current liability is to be paid in the next year, the entire debt should be classified as a current liability.
B) "Current maturities of non-current debt" refers to the amount of interest on notes payable that must be paid in the current year.
C) Even though current and non-current debt must be shown separately on the statement of financial position, it is not necessary to prepare a journal entry to recognize this.
D) A non- current liability is an obligation that is expected to be paid within one year.

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James Albright · Accepted Answer

Final Answer : C, Explanation :  Option C is correct because it accurately reflects accounting practices. Current and non-current debts are indeed shown separately on the statement of financial position (balance sheet), but the classification does not require a specific journal entry. The classification is based on the nature and timing of the liabilities, not on individual journal entries.

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