Which of the Following Operating Activities Is Not Correctly Matched

question 19

Multiple Choice

Which of the following operating activities is not correctly matched with the current liability that results from the activity?

• A)Purchase inventory of goods to be sold » Accounts payable
• B)Employees earn wages » Accrued wages.
• C)Customers pay in advance for future purchases » Accounts receivable.
• D)Rent warehouse space to store goods » Accrued rent.

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Definitions:

Liabilities

Financial obligations or debts owed by a business to external organizations or individuals.

Accrued Revenues

Assets (receivables) created when revenues are earned, but cash will be collected from customers in the future; created at end of period during the adjustment process to reflect the amount of revenue earned by providing goods or services over time to customers who will pay in the future.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the owners' claim on the company assets.

Assets

Resources owned by a company from which future economic benefits are expected to flow to the company.