Which of these accounts is typically classified as a current liability?

• A. Land
• B. Accounts Payable, Loans Payable, and Unearned Revenue
• C. Cash
• D. Retained Earnings

Answer: (B)

Current liabilities are obligations a business expects to settle within one year or the operating cycle. Accounts payable are amounts owed to suppliers for purchases on credit, which are due in the short term, so they fit this category. Unearned revenue represents cash received before delivering goods or services, creating a obligation to perform in the future; that obligation is a current liability until the revenue is earned. A loan payable is a debt, and the portion due within one year is classified as a current liability (the noncurrent portion would be long-term). Cash and land arise from assets, not obligations, and retained earnings is equity, not a liability. So the items that typically appear as current liabilities are accounts payable, the current portion of loans payable, and unearned revenue.