At the end of the first month of operations for SloMo Delivery Service,the business had the following accounts: Accounts Receivable,$1,200;Prepaid Insurance,$500;Equipment,$36,200 and Cash,$40,650.On the same date,SloMo owed the following creditors: Simpson Supply Company,$12,000;Allen Office Equipment,$9,500. The total amount of Liabilities is
A) $36,200.
B) $9,500.
C) $21,500.
D) $40,650.

Question

Quizplus · Accepted Answer

Liabilities are the debts or obligations a business owes to others. In this case, the business owes Simpson Supply Company $12,000 and Allen Office Equipment $9,500, so the total amount of liabilities is $12,000 + $9,500 = $21,500. The other accounts listed (Accounts Receivable, Prepaid Insurance, Equipment, and Cash) are assets, not liabilities.

At the End of the First Month of Operations for SloMo