A Constructive Obligation Arises When

question 24

Multiple Choice

A constructive obligation arises when

• A) the entity is legally obligated to honour the obligation.
• B) the entity makes an unconditional promise to pay money in the future.
• C) past or present company practice reveals the entity acknowledges a potential economic burden.
• D) the entity has a conditional obligation which becomes unconditional if an uncertain future event occurs.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity supplied at those prices in a market.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price.

Substitute

Replacement items or alternatives that consumers may choose, which impacts market demand and competition among sellers.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers over a range of prices.