What are current liabilities?

Current liabilities refer to obligations that a company is expected to settle within one year or within its operating cycle, whichever is longer. This definition captures the short-term obligations that require the use of current assets for their repayment.

The choice indicating that current liabilities are liabilities due within 12 months accurately reflects this concept, as it aligns with the standard accounting definition. Current liabilities typically include items such as accounts payable, short-term loans, and other debts that must be settled in the near term. Managing current liabilities is crucial for a company's liquidity and operational stability.

While other choices discuss aspects of liabilities, they do not precisely define current liabilities as effectively. For example, liabilities that can be paid in the next year could be broader and include both current and non-current liabilities, while liabilities secured against assets refers to secured or collateralized loans, which does not pertain specifically to the timing aspect of liabilities. The option referencing all liabilities not due within one year pertains to long-term liabilities, which are inherently different from current liabilities. Thus, the definition that current liabilities are those due within 12 months is the most accurate representation.