Question

Below are some of the accounts that Company J has on their books:

Cash and Cash Equivalents $1,000
Insurance Expense $500
Accounts Payable $700
Prepaid Rent $200
Accounts Receivable $500
Deferred Revenue $1,200
Inventory $600

Which of the amounts below is the correct total of liabilities?
a) $2,300
b) $1,900
c) $700
d) $1,200

Answer 1

b) $1,900

Step-by-step explanation:

The computation of the total liabilities is shown below:

= Accounts Payable + Deferred revenue

= $700 + $1,200

= $1,900

The other items are related to the expenses which are shown in the income statement and current assets which are shown on the balance sheet

Therefore, only two items are shown in the total liabilities.