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

If a company owes $100 to a supplier for goods purchased on credit, this amount is classified as which type of liability?

Accrued Expenses

Unearned Revenue

Notes Payable

Accounts Payable

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Verified step by step guidance

Understand the nature of the transaction: The company owes $100 to a supplier for goods purchased on credit. This indicates that the company has an obligation to pay the supplier in the future, which is a liability.

Review the definitions of the liability types provided: Accrued Expenses are liabilities for expenses incurred but not yet paid. Unearned Revenue is money received in advance for goods or services yet to be delivered. Notes Payable refers to formal written agreements to pay a specific amount. Accounts Payable represents amounts owed to suppliers for goods or services purchased on credit.

Match the transaction to the correct liability type: Since the company owes money to a supplier for goods purchased on credit, this aligns with the definition of Accounts Payable.

Eliminate incorrect options: Accrued Expenses do not apply because this is not an expense incurred but unpaid. Unearned Revenue is irrelevant because no money was received in advance. Notes Payable does not apply because there is no formal written agreement involved.

Conclude that the correct classification for this liability is Accounts Payable, as it directly corresponds to the nature of the transaction described.