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 best describes the debts or liabilities of commercial banks and thrift institutions that are known as deposits?

Accounts payable to suppliers

Long-term bonds issued to raise capital

Obligations to customers for funds held in checking and savings accounts

Accrued interest on loans made to customers

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Verified step by step guidance

Understand the concept of liabilities: In financial accounting, liabilities are obligations that a company owes to external parties. For banks and thrift institutions, deposits are considered liabilities because they represent money owed to customers.

Identify the nature of deposits: Deposits are funds that customers place in checking and savings accounts. These funds are accessible to customers and are considered obligations of the bank to return upon request or under agreed terms.

Compare deposits to other liabilities: Deposits differ from accounts payable (which are amounts owed to suppliers for goods or services), long-term bonds (which are issued to raise capital), and accrued interest (which is interest owed on loans). Deposits specifically represent obligations to customers.

Focus on the correct description: The correct description of deposits is 'Obligations to customers for funds held in checking and savings accounts,' as this accurately reflects the nature of the liability.

Review the incorrect options: Ensure you understand why the other options (accounts payable, long-term bonds, and accrued interest) do not describe deposits. This reinforces the distinction between different types of liabilities.