A Decrease in Liabilities Will Reduce a Firm's Accounting Profit

question 229

True/False

A decrease in liabilities will reduce a firm's accounting profit.

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Definitions:

Preexisting Duty

An obligation that one party is already legally required to perform and cannot be used as consideration for a new contract.

Consideration

In contract law, consideration refers to something of value exchanged between parties as part of an agreement.

Preexisting Duty

A duty that already exists under contract law, which cannot be used as consideration for a new promise or contract.

Contract

A legally enforceable agreement between two or more parties with mutual obligations.