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    test25's Avatar
    test25 Posts: 4, Reputation: 1
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    #1

    Feb 15, 2008, 09:53 AM
    Long term liability
    Why do accountants divide a long-term liability into a short-term and long-term portion?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Feb 15, 2008, 10:13 PM
    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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