What best defines long-term debt?

Long-term debt is defined as a liability that is due beyond one year from the date of the financial statements. This distinction is important in accounting because it helps stakeholders understand the company's financial obligations over both the short term and the long term. Long-term debt typically includes loans, bonds, and financial leases that are not due for repayment within the next 12 months.

Recognizing long-term debt allows investors and creditors to evaluate the company's cash flow and financial health over more extended periods, indicating how well it can manage its long-term obligations. This classification also impacts financial ratios, which are crucial for assessing financial stability and risk.