Which of the following statements is true about liabilities?
A) Liabilities include insurance premium paid in advance.
B) Liabilities arise when a company sells goods on account.
C) Liabilities equal assets plus stockholders' equity.
D) Liabilities are the debt owed by a company.

Question

Quizplus · Accepted Answer

Liabilities are the debt owed by a company. Option A is incorrect as insurance premium paid in advance is considered as a prepaid expense. Option B is incorrect as it talks about accounts receivable which is an asset, not a liability. Option C is incorrect as liabilities plus stockholders' equity equals assets, not the other way around.

Which of the Following Statements Is True About Liabilities