Question

Which of the following statements is not true about liabilities?

A. liabilities are debts owed to outsiders
B. accounts title of liabilities often include the term "payable"
C. liabilities include accumulated depreciation
D. cash received before a service is performed creates a liabilitiy

Answer 1

Cash received before a service is performed does not create a liability.

Step-by-step explanation:

The statement that is not true about liabilities is D. Cash received before a service is performed creates a liability.

Liabilities are debts owed to outsiders (option A), accounts title of liabilities often include the term "payable" (option B), and liabilities include accumulated depreciation (option C). However, cash received before a service is performed does not create a liability. It is recorded as a liability only after the service is performed.