PRC-1 · Chapter 1 · Question 65 of 100
According to the conceptual framework, a liability is best defined as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A present obligation of the entity arising from past events, expected to result in an outflow of resources.
Explanation
The formal definition of a liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.
More Accounting Basics MCQs
- Q67A company decides to use the straight-line method for depreciation every year rather than switching methods randomly. This practice…
- Q68Which accounting principle ensures that events like employee morale or the operational skill of a manager are entirely ignored in the…
- Q69The 'Historical Cost' concept implies that non-current assets are initially recorded in the accounting records at:
- Q70The 'Prudence concept' in accounting specifically demands caution when making estimates. Therefore, accountants must ensure that they do…
- Q71According to the core principles of accounting, the 'Matching Concept' requires a business to match: