Accounts payable are classified as which of the following?

• A. Current assets
• B. Owner's equity
• C. Current liabilities
• D. Long-term liabilities

Answer: (C)

Verified step by step guidance

1. Understand the definition of accounts payable: Accounts payable represent amounts a company owes to suppliers for goods or services purchased on credit. These are obligations that need to be settled within a short period.
2. Review the classification of liabilities: Liabilities are categorized into current liabilities and long-term liabilities based on their due date. Current liabilities are obligations due within one year, while long-term liabilities are due after one year.
3. Analyze the nature of accounts payable: Since accounts payable are typically due within a short period (usually within one year), they are classified as current liabilities.
4. Eliminate incorrect options: Accounts payable are not assets because they represent obligations, not resources. They are not part of owner's equity because they do not represent ownership interest. They are also not long-term liabilities because they are due within one year.
5. Conclude the classification: Based on the analysis, accounts payable are correctly classified as current liabilities.