Multiple Choice
Which of the following is a finance function that typically falls under the supervision of the treasurer?
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1. Introduction to Accounting
Types of Accounting
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Accounts payable are classified as which of the following?
A
Current assets
B
Owner's equity
C
Current liabilities
D
Long-term liabilities
Verified step by step guidance1
Understand the definition of accounts payable: Accounts payable represent amounts a company owes to suppliers for goods or services purchased on credit. These are obligations that need to be settled within a short period.
Review the classification of liabilities: Liabilities are categorized into current liabilities and long-term liabilities based on their due date. Current liabilities are obligations due within one year, while long-term liabilities are due after one year.
Analyze the nature of accounts payable: Since accounts payable are typically due within a short period (usually within one year), they are classified as current liabilities.
Eliminate incorrect options: Accounts payable are not assets because they represent obligations, not resources. They are not part of owner's equity because they do not represent ownership interest. They are also not long-term liabilities because they are due within one year.
Conclude the classification: Based on the analysis, accounts payable are correctly classified as current liabilities.
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