Identify the liability.
A) Drawings.
B) Prepaid insurance.
C) Accounts payable.
D) Cash at bank.

Question

Quizplus · Accepted Answer

Accounts payable is a liability that represents the amount owed by the business to its suppliers for goods or services received on credit. Drawings is a withdrawal of owner's equity and not a liability. Prepaid insurance is an asset as it represents an advance payment of insurance premiums. Cash at bank is also an asset.

Identify the Liability