A delivery company is creating a statement of financial position.Which of the following would most likely be considered a short-term liability on this statement of financial position?
A)the depreciation over the last year in the value of the vehicles owned by the company
B)revenue received for the delivery of items that have not yet been delivered
C)a loan which must paid back in two years' time
D)prepaid rent on the offices occupied by the company
E)money owed to the firm by customers who have purchased goods on credit

Question

Quizplus · Accepted Answer

Revenue received for the delivery of items that have not yet been delivered is considered a short-term liability because it represents unearned revenue. The company has an obligation to deliver those items, and until the delivery is made, the received funds are not earned and are recorded as a liability.

A Delivery Company Is Creating a Statement of Financial Position