All of the Following Statements Regarding Uncertainty in Liabilities Are

question 145

Multiple Choice

All of the following statements regarding uncertainty in liabilities are except:

• A) Liabilities can involve uncertainty in whom to pay.
• B) A company can create a known amount when issuing a note even though the holder of the note may not be known until the maturity date.
• C) A company can have an obligation of a known amount to a known creditor but not know when it must be paid.
• D) A company only records liabilities when it knows whom to pay, when to pay, and how much to pay.
• E) A company can be aware of an obligation but not know how much will be required to settle it.

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Definitions:

Consumer Spending

The total amount of money spent by consumers on goods and services within an economy.

Recession

Cyclical economic contraction that lasts for six months or longer.

Deregulation

Regulatory trend toward elimination of legal restraints on competition in industries previously served by a single firm in an attempt to improve customer service and lower prices through increased competition.

Regulated Monopolies

Monopolies that are allowed to exist by the government but with restricted and controlled powers to prevent unfair practices.