Question

All of the following are liabilities except?

1) Unused line of credit
2) Estimated income taxes
3) Sales tax collected from customers
4) Advances from customers

Answer 1

An unused line of credit is not a liability as it is a future potential debt that has not been incurred, unlike estimated income taxes, sales tax collected, and advances from customers, which are current obligations.

Step-by-step explanation:

The given question asks to identify which item is not a liability. Of the options provided, an unused line of credit is not considered a liability, because it is simply a potential future borrower's debt that has not yet been incurred. The other options - estimated income taxes, sales tax collected from customers, and advances from customers represent current obligations and are classified as liabilities on the balance sheet. Estimated income taxes are owed to tax authorities, sales tax collected is held in trust for the government, and advances from customers are prepayments for goods or services not yet delivered.