Which of the following is a liability account?

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Study for the Accounting CBE Exam. Gain insights with flashcards and multiple-choice questions, each paired with detailed explanations. Prepare for your accounting certification!

Multiple Choice

Which of the following is a liability account?

Explanation:
Liability accounts reflect obligations the company must settle in the future. Accounts payable specifically tracks amounts owed to suppliers for purchases made on credit. It’s a balance sheet liability that increases when you acquire goods or services on credit and decreases when you pay what you owe. Wages expense is a cost recorded on the income statement, not a liability. Service revenue is income earned by the business, also not a liability. Cash is an asset, representing resources the company owns. So the liability among these is accounts payable.

Liability accounts reflect obligations the company must settle in the future. Accounts payable specifically tracks amounts owed to suppliers for purchases made on credit. It’s a balance sheet liability that increases when you acquire goods or services on credit and decreases when you pay what you owe.

Wages expense is a cost recorded on the income statement, not a liability. Service revenue is income earned by the business, also not a liability. Cash is an asset, representing resources the company owns. So the liability among these is accounts payable.

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