Question

Which of the following items are considered liabilities?

1) Accounts payable
2) Unearned revenue
3) Prepaid rent
4) Retained earnings

Answer 1

Accounts payable and Unearned revenue are liabilities, Prepaid rent is an asset, and Retained earnings are equity.

Step-by-step explanation:

Among the items listed, Accounts payable and Unearned revenue are considered liabilities. Prepaid rent is considered an asset because it represents a service or benefit the company will receive in the future. Lastly, Retained earnings are part of equity, not liabilities. They represent the cumulative profits that have been reinvested in the business and not distributed to shareholders as dividends.