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Questions and Answers
What is an obligation in accounting?
What is an obligation in accounting?
- A duty or responsibility that an entity has no practical ability to avoid. (correct)
- A forecast of future events.
- A legal contract with a customer.
- A transfer of economic resources.
What is a necessary condition for a liability to exist in accounting?
What is a necessary condition for a liability to exist in accounting?
- The entity has a past event that has not occurred.
- The entity has an obligation to transfer an economic resource. (correct)
- The entity has an economic resource to transfer.
- The entity has a future event that is likely to occur.
Which of the following can give rise to an obligation?
Which of the following can give rise to an obligation?
- A change in market prices.
- Entity's customary practices or published policies. (correct)
- A change in government policy.
- A natural disaster.
Is it necessary to know the identity of the counterparty for an obligation to exist?
Is it necessary to know the identity of the counterparty for an obligation to exist?
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Can an obligation exist if the exact amount of the obligation is unknown?
Can an obligation exist if the exact amount of the obligation is unknown?
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What is a condition for recognizing a liability?
What is a condition for recognizing a liability?
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What is an example of an obligation to transfer an economic resource?
What is an example of an obligation to transfer an economic resource?
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What is an example of obtaining economic benefits?
What is an example of obtaining economic benefits?
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When does an entity recognize a liability for ordered equipment?
When does an entity recognize a liability for ordered equipment?
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What is required for a present obligation to exist?
What is required for a present obligation to exist?
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