What term refers to debts that a company expects to pay within one year?

The term that refers to debts that a company expects to pay within one year is "Accounts Payable." This designation covers obligations or liabilities that a company has to its creditors, such as unpaid bills, invoices, or loans that must be settled within a short time frame, typically within the operating cycle of the business, which is usually one year.

Understanding accounts payable is essential for gauging a company's short-term liquidity and financial health because it indicates how much cash the company will need to pay off current debts. This practice ensures that a company manages its cash flow effectively to maintain operations and avoid penalties or loss of creditworthiness due to late payments.

The other terms provided refer to different financial concepts. Accounts Receivable refers to money owed to the company by customers, thus representing incoming cash flow rather than debts. Assets are resources owned by the company, encompassing both current and long-term resources. Equity represents the ownership value in the company after all liabilities have been deducted from assets, which is a different aspect of financial performance.