Chapter 11, Problem 3DQ

To determine

Concept Introduction:

A liability can be defined as an obligation which a person or a company needs to pay which arises during the course of the business.

A liability can be short term or long term depending upon the time period in which it is required to be paid. If a liability is required to be paid with in a period of 12 months i.e. one year it will be treated as current liability and if a liability is required to be paid after 12 months, it will be treated as long term liability.

The uncertainty of liability can be defined as event in which the firm or the company has a liability that it will settle by providing services at an unknown future date.

The three important questions concerning the uncertainty of liabilities