Which of the following is an example of a current liability for a sole trader?

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Question: Which of the following is an example of a current liability for a sole trader?

Options:

Correct Answer: Accounts Payable

Solution:

Accounts Payable is an example of a current liability for a sole trader.

Which of the following is an example of a current liability for a sole trader?

Which of the following is an example of a current liability for a sole trader?

Step 1: Understand what a sole trader is. A sole trader is a person who runs their own business and is personally responsible for its debts.
Step 2: Learn what a current liability is. A current liability is a debt or obligation that a business needs to pay within one year.
Step 3: Identify examples of current liabilities. Common examples include accounts payable, short-term loans, and unpaid bills.
Step 4: Recognize that accounts payable refers to money the business owes to suppliers for goods or services received but not yet paid for.
Step 5: Conclude that accounts payable is indeed a current liability for a sole trader because it is a debt that needs to be settled within a year.

No concepts available.