Accounts Payable is classified as an?

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Multiple Choice

Accounts Payable is classified as an?

Explanation:
Accounts payable represents an obligation to pay suppliers for purchases made on credit, so it is a liability. It sits on the balance sheet as a current liability because it will be settled in the short term. It’s not an asset, since assets are resources you own, not obligations you owe. It’s not revenue, which is income from selling goods or services, and it’s not an expense, which is a cost incurred to run the business. When you pay what you owe, accounts payable decreases and cash decreases; when you incur more credit purchases, it increases.

Accounts payable represents an obligation to pay suppliers for purchases made on credit, so it is a liability. It sits on the balance sheet as a current liability because it will be settled in the short term. It’s not an asset, since assets are resources you own, not obligations you owe. It’s not revenue, which is income from selling goods or services, and it’s not an expense, which is a cost incurred to run the business. When you pay what you owe, accounts payable decreases and cash decreases; when you incur more credit purchases, it increases.

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