When Morgan Hardware Stores Orders Two Cases of Paint from Their

question 42

Multiple Choice

When Morgan Hardware Stores orders two cases of paint from their supplier Sherwin-Williams on credit, the paint store has created for itself a/an:

• A) long-term liability
• B) notes receivable
• C) accounts payable
• D) accounts receivable
• E) notes payable

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Definitions:

Ledger

A comprehensive collection of a company's financial accounts, transactions, and balances.

Current Liabilities

Financial liabilities scheduled for payment within a year or the regular business cycle.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year.

Prepaid Expenses

Payments made for goods or services to be received in the future, recorded as current assets on the balance sheet.