What type of account is 'Mortgage' considered in accounting?

A mortgage is classified as a non-current liability because it is typically a long-term debt that a borrower must repay over a period that usually extends beyond one year. Non-current liabilities refer to obligations that are not expected to be settled within the current accounting period, which distinguishes them from current liabilities that need to be settled within one year.

In the case of a mortgage, it involves borrowing funds to acquire property, and the repayment is made over many years. This long-term nature of the debt aligns with the definition of a non-current liability.

Choosing non-current liabilities for a mortgage reflects the proper understanding of the time frame involved in repayment, which is crucial in accounting for categorizing liabilities correctly in financial statements. This classification helps in assessing the financial health and obligations of an entity, as it differentiates between short-term financial responsibilities and long-term debts.