Why do accountants divide a long-term liability into a short-term and long-term portion?
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Why do accountants divide a long-term liability into a short-term and long-term portion?
Because part of it could be due short-term. i.e. If I have a 10 year loan and I am making monthly payments, then one year's worth is due within one year. Which is the definition of short-term: anything due within one year. The other nine years are over one year, making that portion still long-term.
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