In accounting, the short-term concept applies to the maximum period over which a business liquidates its assets or settles its obligations. This duration is set at one year or the operating cycle of the organization. Only in rare cases is the operating cycle longer than one year, so the duration used in practice is one year. The assets and liabilities that qualify as short-term are classified on the firm's balance sheet as current assets and current liabilities, respectively. These two amounts are then compared to determine whether a business has sufficient short-term assets available to pay for its short-term liabilities.