What is typically included in current liabilities?

Current liabilities represent obligations that a company is expected to settle within one year or within its operating cycle, whichever is longer. Accounts payable is a key component of current liabilities, as it refers to the amounts a company owes to suppliers for goods and services received on credit. This liability is incurred when a company purchases inventory or services without immediately paying for them, thus creating an obligation to pay in the near future.

In contrast, long-term bank loans are classified as long-term liabilities since they are due beyond one year. Inventory held for sale, while an important asset, is not a liability but rather represents resources that the company plans to sell. Equity investments are considered shareholders' equity, reflecting ownership in the company rather than debt obligations. All these distinctions underline why accounts payable is the correct inclusion in the category of current liabilities.