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 liabilities is typically amortized over its useful life?

Accrued expenses

Unearned revenue

A mortgage payable

Accounts payable

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Understand the concept of amortization: Amortization refers to the process of gradually paying off a liability or asset over time, typically through scheduled payments that include both principal and interest.

Review the nature of each liability listed: Accrued expenses are short-term obligations that are not amortized but paid off in a lump sum. Unearned revenue represents payments received in advance for goods or services and is recognized as revenue over time, not amortized. Accounts payable are short-term liabilities paid off in full, not amortized.

Focus on mortgage payable: A mortgage payable is a long-term liability that is typically amortized over its useful life. Payments are made periodically, and each payment includes a portion of the principal and interest.

Understand why mortgage payable is the correct answer: The amortization process for a mortgage payable aligns with the definition of amortization, as the liability is reduced over time through scheduled payments.

Conclude that liabilities like accrued expenses, unearned revenue, and accounts payable are not amortized, while mortgage payable is typically amortized over its useful life.