Which statement defines a current liability?

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Multiple Choice

Which statement defines a current liability?

Explanation:
Current liabilities are obligations a business expects to settle within the short term, typically within 12 months. A debt due within one year is exactly this type of short-term obligation, so it fits the definition of a current liability. In contrast, long-term debt is due after more than a year and is classified as a non-current liability. Equity represents the owners’ claim on the business, not a payable, and an asset is a resource the business owns, not an obligation.

Current liabilities are obligations a business expects to settle within the short term, typically within 12 months. A debt due within one year is exactly this type of short-term obligation, so it fits the definition of a current liability. In contrast, long-term debt is due after more than a year and is classified as a non-current liability. Equity represents the owners’ claim on the business, not a payable, and an asset is a resource the business owns, not an obligation.

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