When preparing final accounts, which of the following is considered a current li

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Question: When preparing final accounts, which of the following is considered a current liability?

Options:

Correct Answer: Accounts payable

Solution:

Accounts payable is considered a current liability.

When preparing final accounts, which of the following is considered a current liability?

When preparing final accounts, which of the following is considered a current liability?

Step 1: Understand what a current liability is. A current liability is a financial obligation that a company needs to pay within one year.
Step 2: Identify examples of current liabilities. Common examples include accounts payable, short-term loans, and accrued expenses.
Step 3: Recognize that accounts payable refers to money a company owes to its suppliers for goods or services received but not yet paid for.
Step 4: Conclude that since accounts payable is a debt that must be settled within a year, it is classified as a current liability.

No concepts available.