Which of the following is not an essential characteristic of a liability? a. Legal enforceability b. Present obligation to third parties c. Involves future sacrifice of economic benefits d. Past activity 2. An example of an item which is not a liability is a. The portion of a long termdebt due within one year b. Estimated warranty costs c. Dividends payable common shares of the issuing corporation
1. Which of the following is not an essential characteristic of a liability?
a. Legal enforceability
b. Present obligation to third parties
c. Involves future sacrifice of economic benefits
d. Past activity
2. An example of an item which is not a liability is
a. The portion of a long termdebt due within one year
b. Estimated warranty costs
c. Dividends payable common shares of the issuing corporation
d. Customers’ deposits
3. Which of the following statements relating to the recognition of liabilities is false
I. Liabilities are recognized when obligations to transfer assets or provide services in the future are incurred in
exchanges
II. Liabilities arising from non-reciprocal transfers are recognized when the corresponding money, goods, or
services are received.
III. Mutually unexecuted contracts are generally not recognized as accounting liabilities
a. I only c. I and II only
b. II only d. I, II, and III
4. The following statements relate to liabilities. Which statement is true?
I. Liabilities may also be measured by estimates of a definitive character when the amount of the liability cannot
be measured precisely
II. A long term, non-interest bearing note payable should be recorded at present discounted value
III. All monetary liabilities shoulde be stated at their present (discounted) value.
a. I & II c. II & III
b. II & III d. I, II, & III
5. Which of the following is not considered a part of the definition of a liability?
a. Unavoidable obligation.
b. Transaction or other event creating the liability has already occurred.
c. Present obligation that entails settlement by probable future transfer or use of cash, goods, or services.
d. Liquidation is reasonably expected to require use of existing resources classified as current assets or create
other current liabilities.
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