A liability is recognized when
A)the exact due date is known.
B)it is paid for.
C)an obligation has arisen.
D)the exact amount of the liability is known.

Question

Quizplus · Accepted Answer

A liability is recognized when an obligation has arisen. The exact due date and amount may not always be known, but as soon as there is a legal or constructive obligation to pay, a liability should be recognized. Payment can occur at a later date, but it is important to recognize the liability when it arises to provide accurate financial statements.

A Liability Is Recognized When