In a classified balance sheet, liabilities are separated into two categories based on:

• A. the amount owed
• B. their maturity or due date
• C. the type of creditor
• D. the interest rate applied

Answer: (B)

Verified step by step guidance

1. Understand the concept of a classified balance sheet: A classified balance sheet organizes assets, liabilities, and equity into subcategories to provide more detailed information about the financial position of a company.
2. Focus on liabilities: Liabilities represent obligations the company owes to external parties, such as creditors or lenders.
3. Learn the classification criteria for liabilities: In a classified balance sheet, liabilities are categorized based on their maturity or due date. This means they are divided into current liabilities (due within one year) and non-current liabilities (due after one year).
4. Recognize examples of current liabilities: These include accounts payable, short-term loans, and accrued expenses, which are obligations expected to be settled within the next 12 months.
5. Recognize examples of non-current liabilities: These include long-term loans, bonds payable, and lease obligations, which are obligations expected to be settled after 12 months.