Which of the following is not a characteristic of a liability?
A) It involves a responsibility to another entity.
B) The company has little or no discretion to avoid the future sacrifice.
C) The sacrifice contributes directly or indirectly to the company's future cash inflows.
D) The transaction obligating the company has already occurred.

Question

Quizplus · Accepted Answer

A liability involves a future sacrifice of resources or obligations that must be fulfilled to another entity. It also arises from a past transaction or event and the company has limited or no discretion to avoid the obligation. However, the sacrifice associated with a liability does not necessarily contribute directly or indirectly to the company's future cash inflows.

Which of the Following Is Not a Characteristic of a Liability