Which of the following is a current liability?

• A. Notes payable due in 2 years
• B. Accounts payable
• C. Mortgage payable
• D. Deferred tax asset

Answer: (B)

Current liabilities are obligations expected to be settled within one year or the operating cycle, whichever is longer. Accounts payable fits this because it arises from purchasing goods or services on credit and is typically due within a short period, making it a short-term obligation.

A note payable due in 2 years is a long-term liability since the payment is not due within one year. A mortgage payable is also long-term debt, usually reported as long-term with the current portion shown separately if due within the next year. A deferred tax asset is an asset, not a liability, representing future tax benefits.

So, the item that represents a short-term obligation is accounts payable.