Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following would most likely be classified as a current liability?

Bonds payable (maturing in 5 years)

Accounts payable

Mortgage payable (due in 10 years)

Deferred tax liability (long-term)

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Verified step by step guidance

Step 1: Understand the concept of current liabilities. Current liabilities are obligations that a company expects to settle within one year or within its operating cycle, whichever is longer. Examples include accounts payable, short-term loans, and accrued expenses.

Step 2: Analyze each option provided in the problem to determine whether it meets the criteria for a current liability. For example, bonds payable maturing in 5 years are long-term liabilities because they are not due within one year.

Step 3: Evaluate 'Mortgage payable (due in 10 years).' Since the mortgage is due in 10 years, it is classified as a long-term liability, not a current liability.

Step 4: Consider 'Deferred tax liability (long-term).' Deferred tax liabilities are typically long-term obligations because they arise from temporary differences between accounting and tax reporting, and they are not expected to be settled within one year.

Step 5: Identify 'Accounts payable' as the correct answer. Accounts payable represents amounts owed to suppliers for goods or services received, and these are typically due within a short period (e.g., 30 to 90 days), making them a current liability.