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

Expenses that are owed by the seller, but will later be paid by the buyer, are considered:

Accrued liabilities

Contingent liabilities

Deferred revenues

Assumed liabilities

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Verified step by step guidance

Understand the concept of 'assumed liabilities': These are obligations or expenses that the seller has incurred but are transferred to the buyer as part of a transaction, such as during the sale of a business.

Differentiate between the given options: Accrued liabilities are expenses incurred but not yet paid, contingent liabilities depend on future events, and deferred revenues are payments received for goods or services not yet delivered. None of these match the definition of assumed liabilities.

Recognize that assumed liabilities are specific to transactions where the buyer agrees to take on the seller's existing obligations, such as unpaid expenses or debts.

Relate this to the problem: The expenses owed by the seller but later paid by the buyer fit the definition of assumed liabilities, as the buyer is taking responsibility for these obligations.

Conclude that the correct classification for such expenses is 'assumed liabilities,' as they are transferred from the seller to the buyer during the transaction.