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    goonies's Avatar
    goonies Posts: 2, Reputation: 1
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    #1

    Aug 30, 2010, 01:22 PM
    What is the implication of misclassifying a liability as current or long-term?
    Am I correct to say one implication of misclassifying a liability as a current or long-term could be that the organization debt would be overstated.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Sep 1, 2010, 02:08 PM

    No, because all liabilities, both current and long-term, are debts. So there's no overstatement of the amount of debt.

    Give it another try. And concentrate on the sub-categories of current and long-term. Yes, it does mean that one of the sub-categories is overstated and one is understated, but they're looking for the implications of that.
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