For a Liability to Exist

question 165

Multiple Choice

For a liability to exist:

• A)a past transaction or event must have occurred.
• B)the exact amount must be known.
• C)the identity of the party must be known.
• D)an obligation to pay cash in the future must exist.

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Definitions:

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, which may not align with the calendar year.

Seasonal Variations

Fluctuations in data or activities that occur at similar periods each year due to seasonal factors.

Adjusting Process

The procedure of making entries to update financial accounts before the preparation of financial statements, to ensure their accuracy and adherence to the accrual basis of accounting.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments have been made for the end of an accounting period.