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

Of the following, which usually would not be classified as a current liability?

Wages payable

Accounts payable

Unearned revenue (to be earned within one year)

Bonds payable, due in 5 years

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Verified step by step guidance

Step 1: Understand the concept of current liabilities. Current liabilities are obligations that a company expects to settle within one year or the operating cycle, whichever is longer. Examples include accounts payable, wages payable, and unearned revenue (if it is expected to be earned within one year).

Step 2: Analyze each option provided in the problem. Wages payable and accounts payable are typically classified as current liabilities because they are expected to be settled within one year. Unearned revenue is also considered a current liability if the revenue is expected to be earned within one year.

Step 3: Consider the nature of bonds payable. Bonds payable are long-term liabilities because they are typically due in more than one year. In this case, the bonds payable are due in 5 years, which clearly classifies them as a long-term liability rather than a current liability.

Step 4: Compare the classification criteria for current liabilities versus long-term liabilities. Current liabilities are short-term obligations, while long-term liabilities are obligations that extend beyond one year. Bonds payable due in 5 years do not meet the criteria for current liabilities.

Step 5: Conclude that bonds payable, due in 5 years, would not be classified as a current liability, as they are a long-term obligation. This aligns with the correct answer provided in the problem.