Accounts payable is a current liability representing amounts owed to whom?

Accounts payable is a current liability representing amounts owed to whom?

• A. A current liability owed to suppliers
• B. A long-term asset
• C. A revenue account
• D. A deferred tax liability

Answer: (A)

Accounts payable is a current liability representing amounts owed to suppliers for goods or services purchased on credit, to be paid in the near term. It sits on the balance sheet as a short-term obligation because the expectation is to settle it within a relatively short period, typically 30 to 60 days. This is not a long-term asset, a revenue account, or a deferred tax liability. It is a liability, specifically owed to suppliers, not to customers or tax authorities, and it arises from purchasing on credit rather than from earning revenue or from taxes.

Accounts payable is a current liability representing amounts owed to suppliers for goods or services purchased on credit, to be paid in the near term. It sits on the balance sheet as a short-term obligation because the expectation is to settle it within a relatively short period, typically 30 to 60 days.

This is not a long-term asset, a revenue account, or a deferred tax liability. It is a liability, specifically owed to suppliers, not to customers or tax authorities, and it arises from purchasing on credit rather than from earning revenue or from taxes.