Which term describes an amount that is owed and payable to someone else?

Which term describes an amount that is owed and payable to someone else?

• A. Accrued
• B. Revenue
• C. Asset
• D. Expense

Answer: (A)

Accrued describes an obligation that has built up but hasn’t been paid yet. In accrual accounting, you record liabilities when a cost is incurred or revenue is earned, even if cash hasn’t moved. An amount owed to someone else is a liability that has accrued, such as wages earned but not yet paid or services received but not billed. Revenue is income, not what you owe. An asset is something you own or are owed, not an amount you owe, and an expense is the cost incurred, not the liability itself. So the term that best fits an amount owed and payable is accrued.

Accrued describes an obligation that has built up but hasn’t been paid yet. In accrual accounting, you record liabilities when a cost is incurred or revenue is earned, even if cash hasn’t moved. An amount owed to someone else is a liability that has accrued, such as wages earned but not yet paid or services received but not billed. Revenue is income, not what you owe. An asset is something you own or are owed, not an amount you owe, and an expense is the cost incurred, not the liability itself. So the term that best fits an amount owed and payable is accrued.