Which of the following is an example of a current liability?

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Multiple Choice

Which of the following is an example of a current liability?

Current liabilities are obligations expected to be settled within one year or the operating cycle, whichever is longer. Accounts payable fits this because it represents amounts owed to suppliers for purchases on credit and is typically due within a short period, like 30 to 60 days. Since it will be paid in the near term with cash, it is classified as a current liability and is part of a company’s working capital. Bonds payable usually reflect long-term debt that matures after more than a year (unless specifically noted as the current portion). Common stock is equity, not a liability. Deferred tax liabilities arise from timing differences and are generally long-term obligations, not short-term payables.

Current liabilities are obligations expected to be settled within one year or the operating cycle, whichever is longer. Accounts payable fits this because it represents amounts owed to suppliers for purchases on credit and is typically due within a short period, like 30 to 60 days. Since it will be paid in the near term with cash, it is classified as a current liability and is part of a company’s working capital.

Bonds payable usually reflect long-term debt that matures after more than a year (unless specifically noted as the current portion). Common stock is equity, not a liability. Deferred tax liabilities arise from timing differences and are generally long-term obligations, not short-term payables.

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