DECA Accounting Applications Practice Exam

The calculation of current liabilities includes obligations that a company is expected to settle within one year. Current liabilities are essential for assessing a company's short-term financial health and its ability to cover its immediate obligations.

Accounts payable is a classic example of a current liability. It represents amounts a business owes to its suppliers for goods and services purchased on credit that are due for payment within a short period, typically within the next operating cycle. This classification reflects the business's commitments that must be paid off soon, making it a critical component of current liabilities.

In contrast, long-term debt, mortgages, and vehicle loans all typically qualify as long-term liabilities because they involve obligations that extend beyond the one-year timeframe. Therefore, they do not contribute to the calculation of current liabilities, distinguishing accounts payable as the correct choice in this context.