On the chart of accounts, which account would you find under liabilities?

On the chart of accounts, which account would you find under liabilities?

• A. Equipment
• B. Landscaping Income
• C. Vehicle loan
• D. Paid-in capital

Answer: (C)

When organizing accounts, liabilities hold the obligations the business owes to others. A vehicle loan fits this category because it represents money borrowed that must be repaid to the lender. Recording the loan as a liability reflects the future outflow of resources to settle the debt, and it will appear on the balance sheet under liabilities. In contrast, equipment is an asset (something the business owns and uses), landscaping income is revenue (it increases equity through earnings), and paid-in capital is equity (owner investments). So the vehicle loan is the account that belongs under liabilities.

When organizing accounts, liabilities hold the obligations the business owes to others. A vehicle loan fits this category because it represents money borrowed that must be repaid to the lender. Recording the loan as a liability reflects the future outflow of resources to settle the debt, and it will appear on the balance sheet under liabilities. In contrast, equipment is an asset (something the business owns and uses), landscaping income is revenue (it increases equity through earnings), and paid-in capital is equity (owner investments). So the vehicle loan is the account that belongs under liabilities.