Which of the following statements regarding liabilities is true?
A)Liabilities must be legally enforceable to a known recipient.
B)Liabilities arise from past activities that require some future sacrifice of economic benefits.
C)The accounting principles followed in the U.S. require that current liabilities be listed in order of decreasing amounts on the balance sheet.
D)The accounting principles followed in the U.S. differ substantially from those of other countries, especially with respect to current liabilities.

Question

Quizplus · Accepted Answer

Liabilities are obligations that arise from past activities or events and require the entity to make some future sacrifice of economic benefits. It does not necessarily have to be legally enforceable to a known recipient. The accounting principles followed in the U.S. require that current liabilities be listed in order of maturity, not by decreasing amounts. Accounting principles may differ from country to country, but there is no substantial difference between U.S. and other countries' principles with respect to current liabilities.

Which of the Following Statements Regarding Liabilities Is True