Which of the Following Statements Regarding Accounts Payable Is Incorrect

question 185

Multiple Choice

Which of the following statements regarding Accounts Payable is incorrect?

• A) The Accounts Payable account is decreased with a credit.
• B) Accounts payable occur because the business receives the goods or services before payment has been made.
• C) Because accounts payable are typically due in 30 days, they are current liabilities.
• D) Accounts payable represent debts owed to creditors.

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Definitions:

Privity of Contract

A legal concept indicating that contracts confer rights and impose obligations only on the parties signing the contract.

Defendant's Liability

The legal responsibility of the defendant in a legal proceeding to compensate for harm caused.

Product Liability Suit

A legal claim against a manufacturer or seller for producing or selling a defective product that caused harm to the consumer.

Negligence

The failure to exercise the level of care that a reasonably prudent person would under similar circumstances, resulting in harm.