A Present Obligation of the Entity Arising from Past Events,the

question 11

Multiple Choice

A present obligation of the entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits is the definition of:

• A)Income
• B)An expense
• C)A liability
• D)Equity

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Definitions:

Common Stock

Common stock represents ownership shares in a corporation, giving holders voting rights and a share in the company's profits through dividends or stock price appreciation.

Par Value

The face value of a bond or a stock as specified by the issuing company, not necessarily related to market value.

Paid-In Capital

Paid-in capital is the amount of money that a company has received from shareholders in exchange for shares of stock, exceeding the par or stated value of the shares.

Retained Earnings

The part of net earnings kept by the company instead of being paid out to its shareholders in the form of dividends.