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:

Allowance Method

An accounting technique used to estimate and record bad debts expense by anticipating uncollectible accounts.

Allowance Method

An accounting technique used to estimate and record uncollectible accounts receivable, reducing the net value of accounts receivable to an amount expected to be collected.

Credit Sales

Sales in which revenue is recognized at the point of sale but payment is deferred till a later date, typically employed in business-to-business transactions.

Uncollectible Accounts

Receivables that are deemed to be uncollectable from debtors, leading to their recognition as a loss.