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    Question

    What happens if a company is unable to pay its current

    liabilities?
    A It is forced to liquidate its assets. Correct Answer Incorrect Answer
    B It is able to renegotiate its debts with lenders. Correct Answer Incorrect Answer
    C It is able to defer its payments to a later date. Correct Answer Incorrect Answer
    D It is able to borrow more money to pay off its debts. Correct Answer Incorrect Answer

    Solution

    Current liabilities refer to the debts and obligations that a company is expected to pay within one year or its operating cycle, whichever is longer. These are debts that are due in the short term and must be paid off quickly to avoid default.

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