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ACCA Knowledge Level Revenue and Expense Transactions on Account — practice questions

Explore 1 free Revenue and Expense Transactions on Account questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Revenue and Expense Transactions on Account questions and exercises with answers

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Accounts Payable is best classified as which type of account?Read the answer and worked solution →

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Accounts Payable is best classified as which type of account?

  1. An asset account
  2. A liability account
  3. A revenue account
  4. An equity account
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Correct answer: B. A liability account

1. Accounts Payable tracks how much a business owes vendors who billed it on account. 2. A debt owed by the business is a liability. 3. It is not something the business owns (asset), so A is wrong. 4. It is neither income earned (revenue) nor owner's claim (equity), ruling out C and D. 5. Therefore Accounts Payable is a liability account. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.4.6 "Expense Transactions on Account", p.32_

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More Financial Accounting topics

Ratio AnalysisStatement of Cash FlowsThe Mechanics of the Accounting ProcessInventory ValuationAsset, Liability and Equity AccountsFinancial StatementsAccounting EquationBonds Payable