Which of the following is reported as a current liability?

• A. Mortgage payable (due in 15 years)
• B. Deferred tax liability (long-term)
• C. Bonds payable (due in 10 years)
• D. Accounts payable

Answer: (D)

Verified step by step guidance

1. 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.
2. Analyze each option provided in the problem: Mortgage payable (due in 15 years), Deferred tax liability (long-term), Bonds payable (due in 10 years), and Accounts payable.
3. Determine the time frame for each liability: Mortgage payable, deferred tax liability, and bonds payable are all long-term obligations because they are due beyond one year. Accounts payable, however, is typically due within a short period (e.g., 30 to 90 days), making it a current liability.
4. Confirm that accounts payable meets the criteria for current liabilities: Accounts payable represents amounts owed to suppliers for goods or services purchased on credit, and these are usually settled within the operating cycle or one year.
5. Conclude that the correct answer is accounts payable, as it is the only option that qualifies as a current liability based on the definition and time frame.