On the balance sheet, which item represents the current portion of long-term debt?

On the balance sheet, which item represents the current portion of long-term debt?

• A. Long-term debt
• B. Current portion of LT debt
• C. Retained earnings
• D. Accounts payable

Answer: (B)

In balance sheet presentation, debt is shown split into current obligations (due within one year) and non-current obligations (due after more than one year). The line item that represents the portion of long-term debt due in the next 12 months is the current portion of long-term debt. It sits with other current liabilities because it must be paid soon, affecting near-term liquidity, while the remainder of the long-term debt stays in non-current liabilities. Long-term debt refers to the amount due after a year, so it wouldn’t be reported as the current portion. Retained earnings are equity, not a liability. Accounts payable are operating liabilities arising from normal business purchases and are not tied to long-term debt schedules.

In balance sheet presentation, debt is shown split into current obligations (due within one year) and non-current obligations (due after more than one year). The line item that represents the portion of long-term debt due in the next 12 months is the current portion of long-term debt. It sits with other current liabilities because it must be paid soon, affecting near-term liquidity, while the remainder of the long-term debt stays in non-current liabilities.

Long-term debt refers to the amount due after a year, so it wouldn’t be reported as the current portion. Retained earnings are equity, not a liability. Accounts payable are operating liabilities arising from normal business purchases and are not tied to long-term debt schedules.