The present obligation to make a future sacrifice that is an essential criteria of the definition of a liability under the IASB Conceptual Framework:
A) can only arise from legal obligations.
B) may arise out of moral or constructive obligations.
C) meets the definition of an expense.
D) may vary in different countries.

Question

Quizplus · Accepted Answer

The IASB Conceptual Framework recognizes that an obligation to make a future sacrifice (such as payment for goods or services received) may arise from not only legal obligations but also from moral or constructive obligations. This is stated in paragraph 4.46 of the Framework. Therefore, choice B is the most accurate answer. Options A, C, and D are incorrect because the definition of a liability is not limited to legal obligations, and obligations are not necessarily expenses. Furthermore, the definition of a liability is similar across different countries.

The Present Obligation to Make a Future Sacrifice That Is