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Current liabilities are those obligations that are expected to be satisfied through the use of current assets or the creation of other current liabilities. All other liabilities are classified as long term. Current liabilities include notes and accounts payable, deferred revenues, accrued liabilities, and the current maturities of long$-$term debt. Long$-$term liabilities include long$-$term notes, loans, mortgages, bonds, pension and lease obligations, as well as deferred income taxes. Shareholders$$ equity for a corporation arises primarily from two sources: $(1)$ paid$-$in capital$$amounts invested by shareholders in the corporation, and $(2)$ retained earnings$$accumulated net income reported by a company since its inception minus all dividends distributed to shareholders.

Knowledge Check $01$

Which of the following is a long$-$term liability?

Multiple Choice

Property, plant and equipment that will be used in operations over $4$ years.

Bonds payable that are due in $5$ years.

A patent that gives exclusive rights over $7$ years.

Land that will be sold in $3$ months.