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Accounting for Liabilities: Payables and Long - Term Debt In accounting, liabilities represent the obligations of a company or entity to pay money or provide

Accounting for Liabilities: Payables and Long-Term Debt
In accounting, liabilities represent the obligations of a company or entity to pay money or provide goods and services to others in the future. Two common types of liabilities are payables and long-term debt.
Payables: Payables, also known as accounts payable, are short-term obligations that arise from the purchase of goods or services on credit. When a company buys goods or services on credit, it incurs a liability to pay the supplier or vendor in the future. Payables are typically recorded on the balance sheet as current liabilities and are usually settled within one year.
Long-Term Debt: Long-term debt refers to borrowings or financial obligations that are due beyond one year from the balance sheet date. Examples of long-term debt include bank loans, bonds payable, and mortgages. Long-term debt is recorded on the balance sheet as a non-current liability and may involve periodic interest payments and repayment of principal over an extended period.
Objective Type Question:
Which type of liability represents short-term obligations arising from the purchase of goods or services on credit?
A) Long-term debt
B) Accounts receivable
C) Payables
D) Equity
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