An overdrawn balance on the firm’s bank account is a liability. Here's why:

1. A liability, in financial terms, is an obligation that a company owes. This could be in the form of loans, accounts payable, mortgages, accrued expenses, or any other debts that the company needs to pay off.

2. An overdrawn balance on the firm's bank account means the company has spent more money than it has in its account. This is essentially a debt the company owes to the bank, making it a liability.

3. On the other hand, Accounts Receivable is an asset because it represents money that is owed to the company. Cash in the firm's safe is also an asset because it's money that the company owns.

4. A factory owned by the firm is considered a fixed asset, not a liability, because it can be used to produce goods and generate income.

5. The capital of the company is also not a liability. It represents the funds contributed by the owners (shareholders) plus the retained earnings (or losses).

So, out of the options given, an overdrawn balance on the firm's bank account is the only one that is a liability.

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An overdrawn balance on the firm’s bank account is a liability. Here's why:

1. A liability, in financial terms, is an obligation that a company owes. This could be in the form of loans, accounts payable, mortgages, accrued expenses, or any other debts that the company needs to pay off.

2. An overdrawn balance on the firm's bank account means the company has spent more money than it has in its account. This is essentially a debt the company owes to the bank, making it a liability.

3. On the other hand, Accounts Receivable is an asset because it represents money that is owed to the company. Cash in the firm's safe is also an asset because it's money that the company owns.

4. A factory owned by the firm is considered a fixed asset, not a liability, because it can be used to produce goods and generate income.

5. The capital of the company is also not a liability. It represents the funds contributed by the owners (shareholders) plus the retained earnings (or losses).

So, out of the options given, an overdrawn balance on the firm's bank account is the only one that is a liability.

Knowee AI · Accepted Answer

An overdrawn balance on the firm’s bank account is a liability. Here's why:

1. A liability, in financial terms, is an obligation that a company owes. This could be in the form of loans, accounts payable, mortgages, accrued expenses, or any other debts that the company needs to pay off.

2. An overdrawn balance on the firm's bank account means the company has spent more money than it has in its account. This is essentially a debt the company owes to the bank, making it a liability.

3. On the other hand, Accounts Receivable is an asset because it represents money that is owed to the company. Cash in the firm's safe is also an asset because it's money that the company owns.

4. A factory owned by the firm is considered a fixed asset, not a liability, because it can be used to produce goods and generate income.

5. The capital of the company is also not a liability. It represents the funds contributed by the owners (shareholders) plus the retained earnings (or losses).

So, out of the options given, an overdrawn balance on the firm's bank account is the only one that is a liability.

Which one of the following is a liabilityGroup of answer choicesAn overdrawn balance on the firm’s bank accountAccounts ReceivableCash in the firm’s safeFactory owned by the firmCapital of the company

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