Money owed
A. Assets
B. Audit
C. Liabilities
D. Capital
C
RIGHT
The correct answer is C. Liabilities.
To understand why money owed falls under liabilities, we need to understand the basic accounting equation: Assets = Liabilities + Capital.
Assets are things of value owned by a person or entity, such as cash, property, or equipment. Liabilities, on the other hand, represent the debts and obligations owed by a person or entity. Capital refers to the owner's equity or investment in the business.
When someone owes money to another person or entity, it creates a liability for the debtor. The money owed is considered a debt or obligation that needs to be repaid. Therefore, money owed is categorized under liabilities.
In accounting, liabilities are listed on the balance sheet. They include items such as loans, accounts payable, and accrued expenses. These liabilities represent the claims of creditors or other individuals or entities that have provided goods or services on credit.
So, in summary, money owed is classified as a liability because it represents a debt or obligation that needs to be repaid.