CIMA BA3 · Chapter 1 · Question 5 of 10
Under the IASB Conceptual Framework, which of the following is the definition of 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 expected future payment without a present obligation is not a liability, and a possible obligation dependent on uncertain future events is a contingent liability rather than a recognised liability.
More The accounting framework and the Conceptual Framework MCQs
- Q7Which body is responsible for developing and issuing IFRS Accounting Standards?
- Q8A business is set up as a limited liability company rather than as a sole trader. Which of the following is a consequence of this?
- Q9Which of the following is a current value measurement basis described in the IASB Conceptual Framework?
- Q10Under the revised IASB Conceptual Framework, an item that meets the definition of an element is recognised in the financial statements when:
- Q1Which of the following best describes the main purpose of financial accounting, as distinct from management accounting?