Which of the Following Is an Example of a Liability

question 96

Multiple Choice

Which of the following is an example of a liability a company would routinely incur to acquire the funds,goods,and services they need to operate?

• A)borrowing money obligates the company to repay the loan
• B)buying assets for cash obligates the company to pay for them
• C)buying assets on credit obligates the company to produce goods
• D)using the knowledge,time,and skill of employees obligates the company to pay for their use
• E)both A and B
• F)both D and E

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Definitions:

Net Credit Sales

The total revenue from sales made on credit, minus any returns or allowances.

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated portion of accounts receivable that may not be collectible.

Uncollectible

denotes accounts receivable that cannot be collected and are therefore written off as a loss by a business.

Adjustment

An entry in bookkeeping that corrects or allocates income and expenditure to the appropriate accounting periods.