IND AS 37 Provisions and Liabilities Quiz
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Questions and Answers

Which of the following best describes a liability?

  • A future obligation arising from potential events, expected to result in an inflow of resources
  • A present obligation arising from past events, expected to result in an outflow of resources (correct)
  • An obligation that arises from events within the control of the entity
  • An obligation that may or may not arise from uncertain future events

    • What is an obligating event?

  • An event that arises from past practices or published policies, giving rise to expectations
  • An event that may or may not create obligations depending on future outcomes
  • An event that results in obligations within the control of the entity
  • An event that creates legal or constructive obligations with no realistic alternative for settlement (correct)

    • What best describes a contingent liability?

  • An obligation that may or may not arise from uncertain future events within the control of the entity
  • A certain obligation arising from past events, confirmed by future events within the control of the entity
  • A possible obligation that may arise from past events, confirmed by future events not in control of the entity (correct)
  • An obligation that is certain to arise from past events, confirmed by future events not in control of the entity

    • What characterizes a contingent asset?

    <p>A possible asset confirmed by uncertain future events not within the control of the entity</p> Signup and view all the answers

    Which statement best defines a legal contract in the context of obligations?

    <p>A formal agreement that creates a legal obligation for settlement</p> Signup and view all the answers

    An obligating event can only be created by a legal contract

    <p>False</p> Signup and view all the answers

    A contingent asset may arise from past events that are not within the control of the entity

    <p>True</p> Signup and view all the answers

    A contingent liability is a present obligation arising from past events

    <p>False</p> Signup and view all the answers

    Contingent assets are confirmed by uncertain future events within the control of the entity

    <p>False</p> Signup and view all the answers

    A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources

    <p>True</p> Signup and view all the answers

    Study Notes

    Liabilities and Contracts

    • A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources.

    Obligating Events

    • An obligating event is not limited to legal contracts; other events can also create an obligation.

    Contingent Liabilities

    • A contingent liability is a present obligation arising from past events, but it's uncertain if the obligation will actually lead to an outflow of resources.

    Contingent Assets

    • A contingent asset may arise from past events that are not within the control of the entity; confirmation is dependent on uncertain future events.
    • A legal contract is not the only way to create an obligating event, and it's not a requirement for an obligation to exist.

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    Description

    Test your knowledge of IND AS 37 provisions, contingent liabilities, and contingent assets with this quiz. Explore the concepts of liabilities, obligating events, and resource outflows. Prepare for a deeper understanding of financial obligations and their impact on organizations.

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