In order for The Gift Market, a local specialty store, to purchase Christmas merchandise for selling in its store, it had to borrow money from a local bank. This debt owed to the bank is a(n)
A) liability.
B) expense.
C) owners' equity.
D) asset.
E) credit.

Question

Quizplus · Accepted Answer

The debt owed to the local bank represents a financial obligation that The Gift Market owes to the bank. This obligation is considered a liability on their balance sheet.

In Order for the Gift Market, a Local Specialty Store