Which of the following is a current liability?

• A. Accounts receivable
• B. Prepaid insurance
• C. Accounts payable
• D. Accrued revenue

Answer: (C)

Current liabilities are obligations a company expects to settle within one year or its operating cycle, whichever is longer. Accounts payable fits this because it represents amounts owed to suppliers for purchases made on credit and are typically due in the short term, making them a current liability. Accounts receivable is money owed to the company and is an asset. Prepaid insurance represents a payment made in advance for future protection and is also an asset. Accrued revenue is revenue earned but not yet billed or collected and is treated as an asset (an accrued receivable) rather than a liability. Therefore, the current liability in the list is accounts payable.