Which of the following statements about current liabilities is true?

Current liabilities refer to debts or obligations that a company is expected to settle within one year or within its operating cycle, whichever is longer. The definition of current liabilities includes items such as accounts payable, short-term loans, and other debts that are due within this short time frame. This characteristic ensures that a company maintains sufficient liquidity to meet its short-term obligations, which is crucial for financial stability and operational efficiency.

The correct answer accurately reflects this aspect of current liabilities, as they are designed to be paid off in full within 12 months. This timeframe is critical for evaluating a company's financial health, as it indicates the portion of liabilities that will require immediate cash flow management.

The other choices do not accurately describe current liabilities. Long-term obligations pertain to debts that extend beyond one year, while investments are not classified as liabilities at all. Moreover, current liabilities cannot be ignored in financial planning, as they must be addressed to ensure a firm can meet its short-term financial commitments without jeopardizing its operational capabilities.