What financial term describes an item that is owed or currently payable to someone else?

What financial term describes an item that is owed or currently payable to someone else?

• A. Accrued
• B. Tariff
• C. Time value of money
• D. Annuity

Answer: (A)

An item that is owed or currently payable to someone else represents a liability on the books. The term accrued describes amounts that have been incurred but not yet paid, so it captures an obligation that is owed and due. In accrual accounting, recording these accrued expenses creates a payable until payment is made, which matches expenses to the period they relate to. The other terms don’t describe a payable item: a tariff is a tax or duty, the time value of money deals with how cash is valued over time, and an annuity is a fixed stream of payments.

An item that is owed or currently payable to someone else represents a liability on the books. The term accrued describes amounts that have been incurred but not yet paid, so it captures an obligation that is owed and due. In accrual accounting, recording these accrued expenses creates a payable until payment is made, which matches expenses to the period they relate to. The other terms don’t describe a payable item: a tariff is a tax or duty, the time value of money deals with how cash is valued over time, and an annuity is a fixed stream of payments.