Which statement correctly describes current liabilities?

Current liabilities are defined as obligations that a company expects to settle within one year from the reporting date. This classification is important for assessing a business's short-term financial health and liquidity. By focusing on liabilities that are due in the near term, stakeholders can better understand a company's ability to meet its immediate financial obligations, such as accounts payable, short-term loans, and accrued expenses.

In this context, the correct response highlights the time frame associated with current liabilities, which differentiates them from long-term liabilities that are expected to be settled over a longer period. Understanding the nature of current liabilities is crucial for both the business's financial management and for lenders or investors assessing risk and stability.