Respuesta :
The correct answer to the given question of loan is option 4) long-term debt
Debt that matures in more than a year is referred to as long-term debt. There are two ways to look at it: through the issuer's financial statement reporting and through financial investment. Companies are required to show long-term debt issuance and any associated payment commitments in their financial statements. In contrast, investing in long-term debt entails putting cash into debt securities having maturities longer than a year. There are a few benefits to issuing long-term debt as opposed to short-term. Both short-term and long-term interest on commitments is seen as a legitimate business expense that can be written off before taxes.
Question :
Wilson's Clothing has a loan payable to a bank which is due 18 months from now. How is this loan classified on the firm's financial statements?
- equity
- current liability
- expense
- long-term debt
- fixed asset
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