Accounts payable would be an example of what kind of account?

Accounts payable would be an example of what kind of account?

• A. A liability account.
• B. An asset account.
• C. A revenue account.
• D. An equity account.

Answer: (A)

Accounts payable represents amounts a business owes to suppliers for purchases made on credit. That obligation is a liability, so it sits on the balance sheet under current liabilities (typically due within a year). It’s not an asset because the company does not own a resource that will bring future benefits; it owes cash instead. It’s not revenue, which would increase income and, in turn, equity, and it’s not equity itself, which reflects the owner’s claim after liabilities. Therefore, accounts payable is a liability account.

Accounts payable represents amounts a business owes to suppliers for purchases made on credit. That obligation is a liability, so it sits on the balance sheet under current liabilities (typically due within a year). It’s not an asset because the company does not own a resource that will bring future benefits; it owes cash instead. It’s not revenue, which would increase income and, in turn, equity, and it’s not equity itself, which reflects the owner’s claim after liabilities. Therefore, accounts payable is a liability account.