Which of the following is an example of a current liability?

• A. Long-term debt
• B. Bonds payable
• C. Accounts payable
• D. Common stock

Answer: (C)

A current liability is defined as an obligation that a company expects to settle within one year or within its operating cycle, whichever is longer. Accounts payable fits this definition perfectly, as it represents the amounts a business owes to its suppliers for goods and services that have been delivered but not yet paid for, and these are typically due within a short timeframe, usually within 30 to 90 days.

In contrast, long-term debt and bonds payable are classified as long-term liabilities because they are due beyond one year. Common stock, on the other hand, represents equity in the company and is not a liability at all. Thus, accounts payable is the correct answer as it directly represents a current obligation that the business must settle in the near future.