Question

Which of the following is a primary type of transaction taht can create liabilities for a company?

a) purchasing inventory
b) borrowing money
c) selling purchased goods
d) leasing assets
e) all of the above

Answer 1

Borrowing money is a primary type of transaction that can create liabilities for a company.

Step-by-step explanation:

The primary type of transaction that can create liabilities for a company is borrowing money.

When a company borrows money, it incurs a debt that it is obligated to repay. This debt creates a liability on the company's balance sheet. The company will typically have to pay back the borrowed amount along with any interest that accrues.

Examples of borrowing money include taking out a loan from a bank, issuing bonds, or issuing debt securities. These transactions provide funds to the company but also create an obligation to repay the borrowed amount.