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Which current liability covers wages and taxes that have built up but for which no bill has arrived?
ANotes payable
BAccounts payable
CAccrued expenses
DBank loan payable
Answer & Solution
Correct answer: C. Accrued expenses
1. Accrued expenses are expenses, typically for wages and taxes, that have accumulated and must be paid at a specified future date within the year.
2. What marks them out is that the firm has not received a bill for them.
3. Accounts payable, by contrast, arise from credit purchases where the supplier has invoiced the firm.
4. Notes payable are short-term loans, so they rest on a loan agreement rather than on costs quietly piling up.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_
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