All of the following statements regarding uncertainty in liabilities are true except:
A)Liabilities can involve uncertainty in whom to pay.
B)A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date.
C)A company can have an obligation of a known amount to a known creditor but not know when it must be paid.
D)A company only records liabilities when it knows whom to pay,when to pay,and how much to pay.Without all three,a liability cannot be recorded.
E)A company can be aware of an obligation but not know how much will be required to settle it.

Question

Quizplus · Accepted Answer

This statement is not true because a company can record a liability with a known amount and payee even if the payment date is uncertain. Recording the liability in this case is required under accrual accounting principles.

All of the Following Statements Regarding Uncertainty in Liabilities Are