On a balance sheet, the accounts payable and salaries payable would fall under the category of ?
On a balance sheet, the accounts payable and salaries payable would fall under the category of current liabilities.
To determine the category of an account on a balance sheet, you need to understand the classification of liabilities. Liabilities are the obligations or debts that a company owes to external parties, and they are classified as either current liabilities or long-term liabilities.
Current liabilities are short-term obligations that are expected to be settled within one year or within the company's operating cycle, whichever is longer. Examples of current liabilities include accounts payable, salaries payable, utilities payable, taxes payable, and short-term loans.
Accounts payable represents the amount of money that a company owes to its suppliers/vendors for goods or services received but not yet paid for. It typically arises from purchases made on credit terms, where the company agrees to pay its suppliers at a later date.
Salaries payable, on the other hand, represents the wages or salaries that a company owes to its employees for work performed but not yet paid. This includes regular wages, overtime pay, bonuses, and any other compensation owed to employees.
Both accounts payable and salaries payable are short-term obligations that would be settled within one year, so they fall under the category of current liabilities on a balance sheet.