What term describes money that must be paid to others, such as utility bills?

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Prepare for the Certified Paraoptometric Assistant (CPOA) Exam. Study with extensive flashcards and multiple choice questions with explanations. Enhance your skills and knowledge to succeed.

Multiple Choice

What term describes money that must be paid to others, such as utility bills?

Explanation:
Money that must be paid to others represents a liability. When a practice receives goods or services and hasn’t paid yet, the amount owed is recorded as accounts payable. This is a current obligation that will be settled with cash in the near term, such as paying utility bills or supplier invoices. Accounts receivable would be money owed to you (an asset, not a payable). Revenue is the income earned from providing services or selling products. Equity reflects the owner’s stake in the business.

Money that must be paid to others represents a liability. When a practice receives goods or services and hasn’t paid yet, the amount owed is recorded as accounts payable. This is a current obligation that will be settled with cash in the near term, such as paying utility bills or supplier invoices.

Accounts receivable would be money owed to you (an asset, not a payable). Revenue is the income earned from providing services or selling products. Equity reflects the owner’s stake in the business.

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