Under the Conceptual Framework, Which of These Is Not a Characteristic

question 63

Multiple Choice

Under the Conceptual Framework, which of these is not a characteristic of a liability?

• A) It must result from a past transaction or event.
• B) It must be a legal debt.
• C) It is expected to result in an outflow of economic resources.
• D) It must be a present obligation of the entity.

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Definitions:

Total Assets

The aggregate of all assets owned by a business, evaluated at cost or market value on the balance sheet.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries have been made, used to prepare financial statements.

Prepaid Insurance

An asset account that represents insurance premiums paid in advance, which are expensed over the period the insurance coverage relates to.

Current Asset

Asset expected to be converted into cash, sold, or consumed within a year or within the business's operating cycle.