Multiple Choice
A corporate certificate indicating that an investor has lent money to a firm is called a(n):
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9. Current Liabilities
Types of Liabilities
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Long-term debts (liabilities) for corporations and governments are called:
A
Unearned revenue
B
Accounts payable
C
Accrued expenses
D
Bonds payable
Verified step by step guidance1
Step 1: Understand the concept of long-term liabilities. Long-term liabilities are obligations that a company or government expects to settle over a period longer than one year. These are typically used to finance large projects or operations.
Step 2: Review the options provided in the problem. Unearned revenue, accounts payable, and accrued expenses are all short-term liabilities or obligations, meaning they are expected to be settled within one year.
Step 3: Define 'Bonds payable.' Bonds payable are a type of long-term liability where corporations or governments issue bonds to raise funds. These bonds are essentially loans from investors, and the issuer agrees to pay back the principal amount along with interest over a specified period.
Step 4: Compare the characteristics of bonds payable with the definition of long-term liabilities. Bonds payable align with the definition because they are obligations that extend beyond one year and are used to finance long-term needs.
Step 5: Conclude that the correct answer is 'Bonds payable,' as it matches the description of long-term debts for corporations and governments.
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