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Question 5 of 20
Which is an advantage of paying off a liability?
OA. The liability remains a liability.
B. The liability starts to lose valu
OC. The liability starts to gain value.
OD. The liability can become an asset.

Sagot :

koredeyusuf799

Answer:

OD is the answer because a liability can become an asset once paid

An advantage of reimbursing the liability is that it becomes an asset when it is being paid.

Option D is correct.

What is an asset?

An asset is the monetary resource of a company which is acquired so that the company would get the maximum benefits in the near future. It is the secondary part of balance sheet which is further classified into two parts namely, current and non-current assets.

Liability is referring to the obligation of a company regarding which the repayment would be done after a certain period of time. In order to repay the liabilities like short-term and long-term borrowings, the assets which can be easily converted into cash are being considered. For instance, the amount due from debtors is a current liability and when it is paid, then it is considered to be a current asset.

Therefore, the advantage written in option D is correct.

Learn more about the assets in the related link:

https://brainly.com/question/14404094

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