Which of the following statements is true?
A) One of the essential characteristics of a liability is that the transaction or other event obligating the entity will probably occur in the future.
B) In order for there to be a liability, a duty or responsibility must be present that obligates a particular entity.
C) In order for there to be a liability, a legally enforceable claim must be present.
D) In order to have a liability, the identity of the recipient must be known.

Question

Quizplus · Accepted Answer

Liabilities require a present obligation that results from past events, where the entity has a duty or responsibility to transfer resources to another party. This obligation does not necessarily need to be legally enforceable (as in C), nor does the future event create the obligation—it merely settles it (contrary to A). Also, the specific identity of the recipient does not need to be known for a liability to exist (contrary to D).

Which of the Following Statements Is True