Question

Amelia Brown is studying towards BS in finance from Perella Weinberg Partners and currently working as Global Equity Analyst Intern for Macquarie Group. Emilia is new and asked to find errors that may happen in some fo the financial statements. She was taking notes starting from the balance sheet and the current assets vs. current liabilities. In her list, which of the following items should not be on a firm's balance sheet under current liabilities:

1. Cost of goods sold.2. Accounts payable.3. Short-term notes payable to the bank.4. Accrued wages.5. Accrued payroll taxes.

Answer 1

The cost of good sold should not be on a firm's balance sheet under current liabilities.

Hence, the correct option is 1. Cost of Goods sold

Step-by-step explanation:

Current Liabilities : The current liabilities are the short term liabilities which is occur for less than one year. It is a short term obligations which the firm has ti pay within one year.

It includes accounts payable, bills payable, income tax payable, accrued expenses, etc.

In the given question, the Accounts payable, Short-term notes payable to the bank, Accrued wages, and Accrued payroll taxes are current liabilities while cost of goods sold is an expense for a company which is not shown in the balance sheet.

The cost of good sold is shown in the income statement.

Thus, the cost of good sold should not be on a firm's balance sheet under current liabilities.

Hence, the correct option is 1. Cost of Goods sold