ACCA FA · Chapter 2 · Question 8 of 10
How does the IASB Conceptual Framework define a liability?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A present obligation of the entity to transfer an economic resource as a result of past events
Explanation
A liability is a present obligation of the entity to transfer an economic resource as a result of past events. An intention to pay, or an obligation that depends on future events, does not meet the definition. Amounts invested by owners are equity, which is the residual interest in assets after deducting liabilities.
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