Which of the Following Is Not a Characteristic of a Liability

question 63

Multiple Choice

Which of the following is not a characteristic of a liability?

• A)obligation always arises from past events
• B)probably requires future sacrifice of resources
• C)requires sacrifice of cash or other current asset
• D)present obligation

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the proportion of a company's assets that are financed by shareholder's equity.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations, calculated as earnings before interest and taxes (EBIT) divided by interest expenses.

Interest Expense

The cost incurred by an entity for borrowed funds, reflected in its income statement.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.