What is the relationship between present value and the concept of a liability?
A) Present values are used to measure certain liabilities.
B) Present values are not used to measure liabilities.
C) Present values are used to measure all liabilities.
D) Present values are only used to measure long-term liabilities.

Question

Quizplus · Accepted Answer

Present value is a financial concept used to calculate the current value of an expected future cash flow. In the context of liability, present values are used to measure certain liabilities, such as long-term debt, pension obligations, and other long-term liabilities that involve future payments. Present values help to determine how much money needs to be set aside today to cover these future payments. Therefore, option A is the correct choice.

What Is the Relationship Between Present Value and the Concept