In Disclosing Liabilities,a Reporting Entity

question 31

Multiple Choice

In disclosing liabilities,a reporting entity:

• A) discloses on the basis of the current/non-current liability dichotomy.
• B) has a choice, based on the notions of relevance and reliability to disclose liabilities either on the basis of the current/non-current liability dichotomy or on the basis of order of liquidity.
• C) has a choice, based on the principle of conservatism to disclose liabilities either on the basis of the current/non-current liability dichotomy or on the basis of order of liquidity.
• D) discloses on the basis of order of liquidity.

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Definitions:

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of stock, rather than cash.

Revoked

To take back, withdraw, or annul an offer, right, or privilege.

Investment Grade

A rating that indicates a low to moderate risk of default for bonds and other securities, suggesting they are a secure investment.

Bond Ratings

Assessments assigned by rating agencies indicating the credit quality and risk level of bonds, with ratings ranging from high-grade (low risk) to high-yield (high risk).