Current liabilities are money you owe within the next 12 months. Which of the following best describes current liabilities?

• A. Money you owe beyond 12 months
• B. Assets that are cash
• C. Money you owe within the next 12 months
• D. Profits

Answer: (C)

Understanding current liabilities means recognizing obligations that must be paid within one year. These are short-term debts or obligations a company owes, and they’re typically settled using current assets or by rolling over debt. Examples include accounts payable, short-term loans, wages payable, and taxes payable. This focus on the near-term timing is why current liabilities are a key part of assessing liquidity and working capital.

The option that describes money you owe within the next 12 months best matches this concept. The other choices describe different things: money owed beyond 12 months refers to long-term liabilities, assets that are cash describe current assets, and profits are earnings rather than obligations.