Asked by Jesse Shiber on Jul 22, 2024
Verified
Which of the following operating activities is not correctly matched with the current liability that results from the activity?
A) Purchase inventory of goods to be sold » Accounts payable
B) Employees earn wages » Accrued wages.
C) Customers pay in advance for future purchases » Accounts receivable.
D) Rent warehouse space to store goods » Accrued rent.
Current Liability
A company's debts or obligations that are due within one year.
Operating Activities
These involve the primary, day-to-day activities of producing goods or providing services, which generate most of the company's revenue.
Accrued Wages
Wages that have been earned by employees but have not yet been paid by the company, representing a liability on the balance sheet.
- Acquire an understanding of the key principles involved in logging financial transactions associated with long-term liabilities and their repercussions on balance sheets.
Verified Answer
MB
michael brianJul 25, 2024
Final Answer :
C
Explanation :
Customers paying in advance for future purchases would result in a current liability of unearned revenue, not accounts receivable. Accounts receivable is created when a company sells goods or services to a customer on credit and expects payment at a later date.
Learning Objectives
- Acquire an understanding of the key principles involved in logging financial transactions associated with long-term liabilities and their repercussions on balance sheets.
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