Question

How are current liabilities related by definition to current assets?

Answer 1

Because current liabilities are bydefinition tied to current assets andcurrent assets by definition are tied to the operating cycle, liabilities arerelated to the operating cycle. ... The entire amount would be reported as a long-term liability.

Answer 2

☛ Current assets are typically reported on the balance sheet in the order of liquidity. ...

☛ Because most companies pay current liabilities of out current assets, the relationship between the two is represented by the current ratio, defined as current assets divided bycurrent liabilities