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 represents an obligation of the company?

Retained Earnings

Common Stock

Sales Revenue

Accounts Payable

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Verified step by step guidance

Understand the concept of an obligation: In financial accounting, an obligation refers to a liability or a responsibility that the company owes to an external party, typically requiring future payment or service.

Analyze each option: Retained Earnings represent accumulated profits that are reinvested in the company and are part of equity, not a liability. Common Stock represents ownership in the company and is also part of equity. Sales Revenue is income earned from selling goods or services and is part of the income statement, not a liability.

Focus on Accounts Payable: Accounts Payable is a liability account that represents amounts the company owes to suppliers or creditors for goods or services received but not yet paid for. This is a clear example of an obligation.

Relate Accounts Payable to the definition of an obligation: Since Accounts Payable requires the company to settle its debts in the future, it fits the definition of an obligation.

Conclude that Accounts Payable is the correct answer because it represents a liability, unlike the other options which are equity or revenue accounts.