Multiple Choice
Which of the following would most likely be classified as a current liability?
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9. Current Liabilities
Types of Liabilities
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Which one of the following is NOT considered a current liability?
A
Accrued Expenses
B
Accounts Payable
C
Notes Payable (due in 18 months)
D
Unearned Revenue (to be earned within 12 months)
Verified step by step guidance1
Understand the definition of a current liability: Current liabilities are obligations that a company expects to settle within one year or the operating cycle, whichever is longer.
Review each option provided in the problem: Accrued Expenses, Accounts Payable, Notes Payable (due in 18 months), and Unearned Revenue (to be earned within 12 months).
Analyze Accrued Expenses: These are expenses that have been incurred but not yet paid, and they are typically settled within a short period, making them a current liability.
Analyze Accounts Payable: These represent amounts owed to suppliers for goods or services received, and they are usually settled within one year, qualifying them as a current liability.
Analyze Notes Payable (due in 18 months): Since this obligation is due beyond one year, it does not meet the definition of a current liability and is instead classified as a long-term liability.
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