All of the Following Are Criteria That Financial Reporting Requires

question 25

Multiple Choice

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

• A) The transaction or event that gave rise to the obligation has already occurred.
• B) The firm has a present obligation and little or no discretion to avoid the transfer.
• C) The firm must know the precise amount of the obligation before recording it.
• D) The obligation involves a probable future sacrifice of economic benefits-a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares-at a specified or determinable date.The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.

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Definitions:

Constructive Fraud

Deception that occurs when a person or entity gains an unfair advantage over another through dishonest or unfair practices, without the need for traditional deceit.

Intent to Deceive

The deliberate intention to mislead or trick someone, often to gain an unfair advantage or benefit.

Material Fact

A fact that is significant or essential to the issue or matter at hand, and could influence a decision.

Securities Exchange Act

The Securities Exchange Act is a U.S. federal law that governs the trading of securities, such as stocks and bonds, to protect investors against fraud and to regulate the securities industry.