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Accounts Payable is best classified as which type of account?
AAn asset account
BA liability account
CA revenue account
DAn equity account
Answer & Solution
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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