Area for a current liability to exist, the liability must be due usually within a year and must be paid out of current assets. The given statement is true.
Current Liabilities are debts that must be repaid immediately, usually within a year or business cycle. Current Liabilities result from regular company activities.
The obligation may or may not be current. These liabilities, which are listed on the balance sheet of the corporation and are due within a year, are current liabilities. Companies frequently create new current obligations or utilize cash (equity) to settle existing current liabilities.
Current liabilities are a business's short-term debts that are due in a year or during a typical operating cycle. The time it takes for a business to buy inventory and turn that stock into cash from sales is known as an operating cycle, also known as the cash conversion cycle.
Thus, In order for a liability to be considered current, it must typically be paid from current assets and be due within a year. The assertion is accurate.
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