Multiple choice

Directions: Choose the correct option for the given question.

Current liabilities do not include

  1. unclaimed dividends

  2. sundry creditors

  3. prepaid insurance

  4. bank overdraft
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Prepaid insurance is classified as a current asset, not a current liability, because it represents an advance payment for an expense that will benefit future periods. Unclaimed dividends, sundry creditors, and bank overdrafts are all standard current liabilities.

Keep practicing — related questions