Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following accounts is classified as a liability?

Service Revenue

Equipment

Accounts Payable

Prepaid Insurance

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Verified step by step guidance

Understand the concept of liabilities: Liabilities are obligations that a company owes to external parties, typically arising from past transactions or events. They are recorded on the balance sheet and represent amounts that must be settled in the future, such as debts or payables.

Analyze each account provided in the question: Service Revenue, Equipment, Accounts Payable, and Prepaid Insurance. Determine whether each account fits the definition of a liability.

Service Revenue: This is classified as a revenue account, representing income earned from providing services. It is not a liability because it does not represent an obligation to pay.

Equipment: This is classified as an asset account, representing physical items owned by the company that are used in operations. It is not a liability because it does not represent an obligation to pay.

Accounts Payable: This is classified as a liability account, representing amounts owed by the company to suppliers or creditors for goods or services received. It fits the definition of a liability because it is an obligation to pay in the future.