Which of the Following Items Would NOT Be Recognised as a Liability

question 4

Multiple Choice

Which of the following items would NOT be recognised as a liability?

• A) Advances from customers for goods and services to be delivered later
• B) Estimated warranty on products sold during the year
• C) A dispute with a customer where there is some possibility that the company could lose the dispute
• D) Amounts owing in wages for work done this period to be paid in the next period

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Definitions:

Large Firms

Companies that are significantly larger than the average for their industry, often having considerable influence over market conditions and prices.

Demand Curve

A graphical representation that shows the inverse relationship between the price of a good or service and the quantity demanded by consumers.

Perfect Competitor

An entity in a highly competitive market where firms sell homogeneous products, have no control over market price, and where there is free entry and exit of firms.

Elastic Demand Curve

Represents a situation where the quantity demanded of a good or service significantly changes in response to a change in price.