NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Personal Financial Planning
Which of the following is best classified as a long-term liability on a client's personal balance sheet?
An outstanding home loan with 15 years remaining is a long-term liability because it is repayable over a period well beyond one year. Credit card dues, premiums due this quarter and the current month's instalment are short-term obligations.
- AOutstanding home loan with 15 years remainingCorrect
- BCredit card bill due next month
- CInsurance premium due this quarter
- DPersonal loan instalment due this month
Explanation
Liabilities repayable beyond one year are long-term. A home loan with 15 years left is long-term, though the portion due within a year may be shown as current. The others fall due within a short period and are current liabilities.
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