Podcast
Questions and Answers
Which of the following best describes a liability?
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?
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?
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?
What characterizes a contingent asset?
Which statement best defines a legal contract in the context of obligations?
Which statement best defines a legal contract in the context of obligations?
An obligating event can only be created by a legal contract
An obligating event can only be created by a legal contract
A contingent asset may arise from past events that are not within the control of the entity
A contingent asset may arise from past events that are not within the control of the entity
A contingent liability is a present obligation arising from past events
A contingent liability is a present obligation arising from past events
Contingent assets are confirmed by uncertain future events within the control of the entity
Contingent assets are confirmed by uncertain future events within the control of the entity
A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources
A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources
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.
Legal Contracts
- A legal contract is not the only way to create an obligating event, and it's not a requirement for an obligation to exist.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
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.
