A Deferred Credit Meets the Definition of a Liability Because

question 24

Multiple Choice

A deferred credit meets the definition of a liability because

• A) It is a probable future sacrifice of assets as the result of a past transaction or event.
• B) It is a present obligation to transfer assets to another entity.
• C) It is an accrual representing an obligation to pay money in the future.
• D) It is a present obligation to provide services to another entity.

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Definitions:

Horizontal Merger

A business consolidation that occurs between firms which operate in the same industry, often aimed at reducing competition or achieving economies of scale.

Interlocking Directorate

A situation where one or more members of the board of directors of a corporation are also on the board of directors of a competing corporation; illegal under the Clayton Act.

Tying Contract

An agreement requiring a customer to buy additional products or services along with a primary product or service.

Herfindahl Index

A measure of the size of firms in relation to the industry and an indicator of the amount of competition among them, calculated as the sum of the squares of the market shares of each firm within the industry.