In Disclosing Liabilities,a Reporting Entity

question 11

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.
• E) Discloses on the basis of directions from its auditor.

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Definitions:

Tort

A tort is a civil wrong or injury, other than a breach of contract, that causes harm to another, leading to legal liability for the person who commits the tortious act.

Crime

An action or omission that constitutes an offense and is punishable by law.

Illegal Substance

A drug or other material that is forbidden by law to possess, use, or distribute.

Agreement

A mutual understanding or arrangement between two or more parties defining each party's rights and obligations.