Which of the Following Statements Is Characteristic of Liabilities

question 151

Multiple Choice

Which of the following statements is characteristic of liabilities?

• A) Liabilities must be legally enforceable to a known recipient.
• B) Liabilities arise from past activities that require some future sacrifice of economic benefits.
• C) The accounting principles followed require that current liabilities be listed in order of decreasing amounts on the balance sheet.
• D) The accounting principles followed in some countries differ substantially from those of other countries, especially with respect to current liabilities.

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Definitions:

Rents and Profits

The income achieved from leasing real estate or other properties, and the gains derived from their operation.

Lease Agreement

A legal contract between a lessor and lessee that outlines the terms and conditions under which a property is rented.

Purchase Options

are contracts granting the buyer the right, but not the obligation, to buy an asset at a predetermined price within a specific timeframe.

Dormant Minerals Statute

Legislation that allows for the reversion of mineral rights to the surface owner if those rights have not been exercised or leased for a certain period.