Question

What sort of transaction typically creates an account payable? What do wemean by accrued liabilities? Provide...

What sort of transaction typically creates an account payable? What do wemean by accrued liabilities? Provide some common examples. What type oftransaction typically creates a note payable?

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Answer #1

Account payable

When inventory or office supplies are purchased on credit , it creates account payable since amount is yet to be paid to the supplier from whom inventory has been purchased on credit.

Accrued liabilities

When a particular expense has not been paid so far, it becomes an accrued liability. In other words, outstanding expenses are the accrued liabilities of the business.

Examples - Salaries outstanding, Office rent outstanding, Electricity bill outstanding, stationery bill outstanding

Note payable

Notes payables are the promissory notes issued by a firm, accepting that the particular sum mentioned in the note will be repaid at the date mentioned on it. When a firm needs funds, it can borrow funds from bank by issuing a promissory note.

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