What is an example of a current liability?

A current liability is an obligation that a company expects to settle within one year or within its operating cycle, whichever is longer. Accounts payable are a prime example of a current liability, as they represent amounts owed to suppliers for goods or services that have been received but not yet paid for. This obligation is anticipated to be settled in the near term, typically through cash payments.

In contrast, long-term debt refers to loans and financial obligations that are due beyond a year, which do not meet the definition of current liabilities. Property and equipment are classified as long-term assets and are not liabilities at all, while investments fall into another category of financial assets rather than liabilities. Understanding the distinction between these categories is crucial for accurately evaluating a company's financial position.