Which of These Criteria Specified in the Conceptual Framework Must

question 12

Multiple Choice

Which of these criteria specified in the Conceptual Framework must be met before a liability can be recognised in the accounting records?
i. It is probable that the future sacrifices associated with the item will occur.
ii. The liability is beyond a reasonable doubt.
iii. The liability has a cost or value that can be measured with reliability.

• A) i, ii, iii
• B) i, iii
• C) ii, iii
• D) i, ii

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Accounts Payable

Liabilities or amounts owed by a company to suppliers for goods and services received but not yet paid for.

Inventory

The total amount of goods and materials held by a company, intended for sale or production.

Investing Transactions

Activities related to the acquisition or disposal of long-term assets and investments not included in cash equivalents within a company.