Which of the Following Descriptions Would Not Fit the Definition

question 98

Multiple Choice

Which of the following descriptions would not fit the definition of a liability?

• A) Obligation to deliver services already paid for
• B) Result of past transaction
• C) Future obligation for future salary payments
• D) Present obligation for future payment

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Definitions:

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders.

Earnings and Profits

A measure of a corporation’s ability to pay dividends to shareholders, not necessarily equal to net income.

Dependent Care Assistance Plans

Benefit plans offered by employers that allow employees to use pre-tax dollars to pay for dependent care expenses.

Married Filing Separately

A filing option for married partners that enables them to report their personal income, deductions, and exemptions separately on individual tax returns.