UNLV Accounting Competency Practice Exam 2025 – The Complete All-in-One Guide to Exam Success!

Accounts payable is considered a current liability because it represents amounts that a company owes to its suppliers for goods and services that have been received but not yet paid for. This liability is typically expected to be settled within one year or within the company's operating cycle, whichever is longer. Current liabilities are essential for understanding a company's short-term financial obligations and liquidity.

Long-term loans, in contrast, are classified as long-term liabilities since they are obligations that are not due for payment within the next year. Property, plant, and equipment are assets rather than liabilities, reflecting investments in physical assets used for operations. A loyalty rewards program, while it may lead to future obligations, is generally not classified as a current liability in the sense of immediate payment due; instead, it would be treated as a contingent liability until customers claim the rewards. Therefore, accounts payable accurately fits the definition of a current liability, making it the appropriate choice.