Which of the following is NOT an example of a liability?

• A. Unearned Revenue
• B. Accounts Payable
• C. Accrued Expenses
• D. Notes Receivable

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the definition of a liability. A liability is an obligation that a company owes to external parties, typically arising from past transactions or events, and is expected to result in an outflow of resources (e.g., cash, goods, or services).
2. Step 2: Analyze each option provided in the question: Unearned Revenue, Accounts Payable, Accrued Expenses, and Notes Receivable.
3. Step 3: Define each term: - Unearned Revenue: A liability that represents money received before goods or services are delivered. - Accounts Payable: A liability that represents amounts owed to suppliers for goods or services received. - Accrued Expenses: A liability that represents expenses incurred but not yet paid. - Notes Receivable: An asset that represents amounts owed to the company by others, typically documented in a formal agreement.
4. Step 4: Identify which term does not fit the definition of a liability. Since Notes Receivable is an asset (not a liability), it is the correct answer to the question.
5. Step 5: Conclude that Notes Receivable is NOT an example of a liability because it represents an asset, which is a resource owned by the company, rather than an obligation owed to others.