Answer to Question #123838 in Accounting for Thikhedzo Raphunga

Question

Why differentiation is made between current liabilities and non current liabilities

Answer 1

The classification of liabilities as current or non current depends on how quickly the debt is repaid. For example, a large loan or mortgage is generally considered a non current liabilities because it can last for several years. However, monthly payments on such a loan are considered current liabilities.