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

1. Introduction to Accounting

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

How will accounts payable be reported on the financial statements?

As a revenue on the income statement

As an asset on the balance sheet

As an expense on the income statement

As a current liability on the balance sheet

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Verified step by step guidance

Understand the nature of accounts payable: Accounts payable represents amounts owed by a company to suppliers or creditors for goods or services received but not yet paid for. It is a liability because it reflects an obligation to pay in the future.

Identify the classification of accounts payable: Since accounts payable is expected to be settled within a short period (usually within one year), it is classified as a current liability on the balance sheet.

Review the financial statement structure: The balance sheet is divided into three main sections: assets, liabilities, and equity. Current liabilities, including accounts payable, are listed under the liabilities section.

Compare accounts payable to other financial statement items: Accounts payable is not revenue (which is reported on the income statement), nor is it an asset (which represents resources owned by the company). It is also not an expense, as expenses represent costs incurred during operations and are reported on the income statement.

Conclude the reporting location: Based on its nature and classification, accounts payable is reported as a current liability on the balance sheet, reflecting the company's obligation to pay within the short term.