1. Which of the following is not an essential characteristic of a liability? * a. It is a present obligation that entails settlement by probable future transfer or use of cash, goods or services. b. The liability must be an unavoidable obligation. c. The transaction or other event O creating the obligation must have

1. Which of the following is not an essential characteristic of a liability? * a. It is a present obligation that entails settlement by probable future transfer or use of cash, goods or services. b. The liability must be an unavoidable obligation. c. The transaction or other event O creating the obligation must have

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

1. Which of the following is not
an essential characteristic of a
liability? *
a. It is a present obligation that
entails settlement by probable
future transfer or use of cash,
goods or services.
b. The liability must be an
unavoidable obligation.
c. The transaction or other event
creating the obligation must have
already occurred.
d. The obligation must be settled to
an identifiable party.

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