Which of the following liabilities is most likely to increase spontaneously with an increase in sales?
A)Notes payable
B)Long-term bonds
C)Preferred stock
D)Accounts payable
E)Common stock

Question

Quizplus · Accepted Answer

Accounts payable are a type of current liability that increases spontaneously with an increase in sales. This is because as the company sells more goods or services, it will likely need to purchase more inventory or supplies on credit from suppliers. The amount owed to suppliers will increase as sales increase, leading to a corresponding increase in accounts payable. The other options listed, such as notes payable, long-term bonds, preferred stock, and common stock, are not directly tied to increases in sales and would not increase spontaneously as a result.

Which of the Following Liabilities Is Most Likely to Increase