Which item is a current liability?

Which item is a current liability?

• A. Wages Payable
• B. Notes Receivable
• C. Property, Plant, and Equipment
• D. Common Stock

Answer: (A)

Current liabilities are obligations a company expects to settle within one year or within its operating cycle. Wages payable fits this because it’s wages earned by employees but not yet paid, a short-term obligation that will be settled soon. Notes receivable is an asset—the amount others owe the company. Property, Plant, and Equipment are long-lived assets, not liabilities. Common stock is equity, representing ownership rather than an obligation. So wages payable is the current liability.

Current liabilities are obligations a company expects to settle within one year or within its operating cycle. Wages payable fits this because it’s wages earned by employees but not yet paid, a short-term obligation that will be settled soon. Notes receivable is an asset—the amount others owe the company. Property, Plant, and Equipment are long-lived assets, not liabilities. Common stock is equity, representing ownership rather than an obligation. So wages payable is the current liability.