Which of the following is considered to be a liability?
A) Prepaid expenses
B) Investments
C) Unearned revenues
D) Accrued revenues

Question

Quizplus · Accepted Answer

Unearned revenues are considered to be liabilities because they represent cash received by a company for goods or services that have not yet been provided. The company has an obligation to fulfill these services or provide these goods, and until they do, the cash received is considered a liability. Prepaid expenses are assets, investments could be either assets or liabilities depending on the nature of the investment, and accrued revenues are revenues that have been earned but not yet received, and therefore are not considered liabilities.

Which of the Following Is Considered to Be a Liability