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 is classified as a current liability?

Bonds payable (due in 10 years)

Preferred stock

Mortgage payable (due in 15 years)

Accounts payable

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Verified step by step guidance

Understand the definition of a current liability: A current liability is an obligation that is expected to be settled within one year or the operating cycle, whichever is longer. Examples include accounts payable, short-term loans, and accrued expenses.

Analyze each option provided in the problem: Bonds payable (due in 10 years), Preferred stock, Mortgage payable (due in 15 years), and Accounts payable.

Evaluate Bonds payable: Since the bonds are due in 10 years, they are classified as a long-term liability, not a current liability.

Evaluate Preferred stock: Preferred stock represents equity, not a liability, so it cannot be classified as a current liability.

Evaluate Accounts payable: Accounts payable is typically due within a short period (e.g., 30 to 90 days) and is therefore classified as a current liability.