Noncurrent liabilities

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

Related terms

Current Liabilities:

Financial obligations due within one year or an operating cycle, whichever is longer.

Bonds Payable:

Long-term debt instruments issued by corporations or governments with promises to pay periodic interest and principal at maturity.

Balance Sheet:

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.