A Liability Must Be Recognized When a Business Is Required

question 110

True/False

A liability must be recognized when a business is required to transfer assets or provide services to another entity at some point in the future for activities that have already occurred.

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Definitions:

Profit Center

A segment or department within a business that is responsible for generating its own revenue and profit, assessed separate from other areas of the company.

Revenues

The total amount of money received by the company for goods sold or services provided during a certain time period.

Operating Income

Earnings from a company's core business operations, excluding income from investments and after operational expenses have been deducted.

Support Department Allocations

The process of distributing the costs of support departments (such as HR and IT) to producing departments based on predetermined criteria.