Which of the Following Statements About a Liability Is True

question 23

Multiple Choice

Which of the following statements about a liability is true?

• A) A liability is restricted to being a legal debt.
• B) A liability must result from a past transaction or event.
• C) A liability arises when a business creates reserves for contingencies.
• D) A liability results even if the entity can avoid the sacrifice of economic reasons.

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Definitions:

Traditional Types

Refers to the original, long-established categories or methods in various fields, including cultures, practices, or technologies.

Observed Scores

Quantitative measurements or outcomes obtained from testing or assessment.

Formula

A mathematical expression that calculates or represents a relationship between different variables.

Times Interest Earned Ratio

A financial metric indicating how well a company can meet its interest obligations based on its earnings before interest and taxes.