Recording current liabilities: show what you know

Which of the following describes an arrangement between two parties where one party agrees to supply the second party with financing?

• Deferred revenue

• Written check

• Cash payment

• Line of credit

Line of credit

Which of the following are examples of line of credit?

Select all that apply.

• An account with a supplier

• A credit card

• A short-term loan

• A long-term loan

An account with a supplier

A credit card

A short-term loan

What is the name of the account that tracks short-term debts to third parties?

• Accounts receivable

• Deferred revenue

• Accounts payable

• Liabilities

Accounts payable

How are credit purchases entered into a transaction journal or general ledger?

• As a debit to an expense or asset account and a credit to accounts payable

• As a debit to an expense account and a credit to accounts receivable

• As a credit to an expense account and a debit to accounts payable

As a debit to an expense or asset account and a credit to accounts payable

Which of the following describes the relationship between cash payments and liabilities?

Select all that apply.

• Cash payments affect liabilities when the cash is being used to pay off a loan/credit balance

• Cash payments are generally considered liabilities

• Purchases made with cash are generally not considered liabilities

Cash payments affect liabilities when the cash is being used to pay off a loan/credit balance

Purchases made with cash are generally not considered liabilities

Which of the following is considered unearned revenue?

Select all that apply.

• Gift cards

• Pre-paid subscriptions

• Deferred revenue

• Money received in advance of a product or service being provided

Gift cards

Pre-paid subscriptions

Deferred revenue

Money received in advance of a product or service being provided

Which of the following is the leading criteria to determine how the purchase of an item on credit is recorded under accounts payable?

• Usefulness to the business

• Method of purchase

• Cost/value

Cost/value

How do you balance the accounting equation for a $200 tool purchased on credit?

• Decrease liabilities and increase equity by the same amount, with no change to assets

• Increase assets and increase equity by the same amount, with no change to liabilities

• Increase liabilities and decrease equity by the same amount, with no change to assets

Increase liabilities and decrease equity by the same amount, with no change to assets