Multiple Choice
Which of the following would be considered a long-term liability?
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9. Current Liabilities
Types of Liabilities
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Accrued salaries payable and deferred revenues are examples of which type of liability?
A
Equity
B
Current liabilities
C
Long-term liabilities
D
Contingent liabilities
Verified step by step guidance1
Understand the concept of liabilities: Liabilities are obligations that a company owes to external parties, which can be classified into different types based on their nature and timing.
Learn about current liabilities: Current liabilities are obligations that are expected to be settled within one year or the operating cycle, whichever is longer. Examples include accounts payable, accrued expenses, and deferred revenues.
Understand accrued salaries payable: Accrued salaries payable represent salaries that have been earned by employees but not yet paid by the company. This is a short-term obligation and falls under current liabilities.
Understand deferred revenues: Deferred revenues are payments received by a company for goods or services that have not yet been delivered or performed. Since these obligations are typically settled within a year, they are classified as current liabilities.
Conclude the classification: Both accrued salaries payable and deferred revenues are examples of current liabilities because they are short-term obligations expected to be settled within the operating cycle or one year.
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