Which of the Following Is Not a Characteristic of a Liability

question 66

Multiple Choice

Which of the following is not a characteristic of a liability?

• A) It involves a responsibility to another entity.
• B) The company has little or no discretion to avoid the future sacrifice.
• C) The sacrifice contributes directly or indirectly to the company's future cash inflows.
• D) The transaction obligating the company has already occurred.

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific point in time, detailing assets, liabilities, and equity.

Deduction

A deduction is an expense that can be subtracted from gross income in order to reduce the amount of income that is subject to tax.

Premium On Bonds Payable

The amount by which the bond's selling price exceeds its face value, reflecting additional cost to the issuer but higher interest income for the investor.

Balance Sheet

A financial overview capturing a company’s holdings, liabilities, and the proportion of equity owned by shareholders, pegged at a specific date.