Accounting Fundamentals Certification (AFC) Practice Test

Question: 1 / 400

Which of the following accounts is specifically considered a liability?

Accounts Receivable

Inventory

Accounts Payable

Accounts Payable is specifically considered a liability because it represents amounts that a company owes to its suppliers or creditors for goods and services purchased on credit. This account reflects a legal obligation that the company has to settle debts in the future, indicating that cash will need to be expended to fulfill this obligation.

In contrast, Accounts Receivable is an asset that shows amounts owed to the company by customers for services rendered or products sold. Inventory is also an asset, representing goods that are available for sale. Cash, while crucial for any business operation, is an asset that represents liquid funds available for immediate use. Thus, Accounts Payable stands out as the only option that qualifies as a liability.

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Cash

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