The Classification and Normal Balance of the Accounts Payable Account

question 195

Multiple Choice

The classification and normal balance of the accounts payable account is

• A) an asset with a credit balance
• B) a liability with a credit balance
• C) owner's equity with a credit balance
• D) revenue with a credit balance

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Definitions:

Exchange Rates

The worth of a single currency when converted into another, indicating the comparative value between two currencies.

Profit

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes associated with the activity.

Covered Interest Arbitrage

A strategy that involves converting currency through the spot exchange market, investing in foreign interest bearing securities, and hedging exchange risk through the forward market to earn riskless profit.

Forward Rate

The predicted interest rate for a loan or investment for a specific period in the future, differing from current rates.