Which type of current liability changes automatically with changes in sales?

The type of current liability that changes automatically with changes in sales is known as spontaneous liabilities. These liabilities are not formally contracted but arise naturally through the normal operations of a business, primarily influenced by the level of sales.

As sales increase, businesses typically incur higher costs related to inventory purchases and operating expenses, leading to an increase in accounts payable and other short-term obligations automatically. This means that the liabilities adjust in direct proportion to the business activity, reflecting the ongoing nature of day-to-day transactions.

Spontaneous liabilities include items such as accounts payable and accrued expenses, which accumulate as the business's sales and revenue grow. This dynamic relationship makes them distinct from other types of liabilities, which may not fluctuate directly with sales volume. In contrast, discretionary liabilities are those that a company has some control over, such as dividends payable, while fixed liabilities usually remain constant over a short period and are not directly tied to sales level changes. Current liabilities, as a broader category, include both spontaneous and fixed liabilities but do not specify the automatic connection with sales that defines spontaneous liabilities.