Financial Accounting Liabilities Quiz
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Questions and Answers

Which of the following characteristics defines a liability?

  • A transaction or event that obligates the entity in the past
  • A transaction or event that may obligate the entity in the future
  • A transaction or event that obligates the entity in the future (correct)
  • A transaction or event that obligates the entity in the present

    • Which of the following is a characteristic of a liability that obligates the entity to another?

  • The entity is obligated to settle only if it chooses to
  • The entity has little or no discretion to avoid settlement (correct)
  • The entity has complete discretion to avoid settlement
  • The entity is not obligated to settle

    • Which of the following is an example of a liability?

  • A payment made for goods or services already received
  • A payment made for goods or services that will never be received
  • A payment made for goods or services to be received in the future (correct)
  • A payment made in advance for goods or services

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