Which of these accounts is typically classified as a current liability?

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Prepare for the WGU ACCT2350 Intro to Business Accounting Exam. Practice with multiple choice questions and detailed solutions to sharpen your accounting skills. Master your exam with confidence!

Multiple Choice

Which of these accounts is typically classified as a current liability?

Explanation:
Current liabilities are obligations the company expects to settle within one year or the operating cycle. Unearned revenue fits that description because it arises when cash is received before providing goods or services, creating an obligation to perform in the near term. Until the performance occurs, the company owes the customer, so this account is classified as a current liability. The other items are assets: accounts receivable is money owed to the company (a current asset), land is a long-term asset, and cash is a current asset.

Current liabilities are obligations the company expects to settle within one year or the operating cycle. Unearned revenue fits that description because it arises when cash is received before providing goods or services, creating an obligation to perform in the near term. Until the performance occurs, the company owes the customer, so this account is classified as a current liability. The other items are assets: accounts receivable is money owed to the company (a current asset), land is a long-term asset, and cash is a current asset.

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