Which item is typically a current liability?

Which item is typically a current liability?

• A. Property, Plant & Equipment
• B. Long-term debt
• C. Accounts Payable
• D. Inventory

Answer: (C)

Current liabilities are obligations a company expects to settle within one year (or its operating cycle). Accounts payable fits this, as it represents amounts owed to suppliers for purchases already made that are typically due in the short term. Property, plant and equipment are long-lived assets, not liabilities. Long-term debt is a liability due after more than a year, so it’s noncurrent. Inventory is a current asset, not a liability, since it’s held for sale or production. Hence, accounts payable is the typical current liability.

Current liabilities are obligations a company expects to settle within one year (or its operating cycle). Accounts payable fits this, as it represents amounts owed to suppliers for purchases already made that are typically due in the short term. Property, plant and equipment are long-lived assets, not liabilities. Long-term debt is a liability due after more than a year, so it’s noncurrent. Inventory is a current asset, not a liability, since it’s held for sale or production. Hence, accounts payable is the typical current liability.