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

The amount a business borrows and for how long depends on which of the following?

The owner's personal preferences

The business's advertising budget

The number of employees in the business

The nature and timing of the business's liabilities

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Verified step by step guidance

Understand the concept of liabilities: Liabilities are obligations that a business owes to external parties, such as loans, accounts payable, or other debts. These obligations often have specific due dates and amounts.

Recognize the importance of timing: The timing of liabilities refers to when the business needs to settle its obligations. For example, short-term liabilities may require repayment within a year, while long-term liabilities may extend beyond a year.

Consider the nature of liabilities: The nature of liabilities refers to the type or purpose of the obligation. For instance, a business may borrow funds to purchase equipment, finance operations, or cover unexpected expenses.

Evaluate borrowing decisions: A business's borrowing decisions should align with the timing and nature of its liabilities. For example, if a business has short-term liabilities, it may opt for short-term loans to match repayment schedules.

Avoid irrelevant factors: Factors such as the owner's personal preferences, advertising budget, or number of employees are not directly related to borrowing decisions. The focus should remain on the nature and timing of liabilities to ensure financial stability.