The amount of an obligation must be known in advance to be considered a liability.

Name: The amount of an obligation must be known in advance to be considered a liability.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The amount of an obligation does not necessarily have to be known in advance for it to be considered a liability. An estimate of the amount can be made if it cannot be determined with precision. However, the nature of the obligation and the fact that it will result in a future outflow of economic resources must be certain.

The Amount of an Obligation Must Be Known in Advance