A Liability Is Properly Accounted for as an Account Payable

question 40

Multiple Choice

A liability is properly accounted for as an account payable if

• A) the amount is known and owed as of the balance sheet date.
• B) the amount can be estimated and is owed at the balance sheet date.
• C) the amount is known at the balance sheet date and owed by the end of the next fiscal year.
• D) the amount is estimated and owed within 90 days of the balance sheet date.

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Definitions:

Corporate Articles

Legal documents filed with a governmental body to formally establish the existence of a corporation under the law.

Equity

A measure of ownership interest in a corporation or asset, reflecting the residual value to shareholders after debts and liabilities have been settled.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives).

Ownership

The legal right to possess, use, control, and dispose of property or an item.