study guides for every class

that actually explain what's on your next test

Noncurrent liabilities

from class:

Financial Accounting I

Definition

Noncurrent liabilities are financial obligations not due within one year. They represent long-term debts and other commitments that a business is expected to settle in the future.

5 Must Know Facts For Your Next Test

  1. Noncurrent liabilities include bonds payable, long-term loans, and lease obligations.
  2. They are listed on the balance sheet under the section for liabilities but separate from current liabilities.
  3. Interest expense related to noncurrent liabilities is often recorded periodically even if the principal is due at a later date.
  4. Noncurrent liabilities can impact a company's credit rating and borrowing capacity.
  5. The portion of a noncurrent liability due within the next year is reclassified as a current liability.

Review Questions

  • What distinguishes noncurrent liabilities from current liabilities?
  • Give three examples of noncurrent liabilities typically found on a balance sheet.
  • How does the reclassification of noncurrent liabilities affect financial statements?
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.
Glossary
Guides