A liability arises when a firm
A)signs a new labor union contract which includes a 6% pay raise for its union employees.
B)issues a purchase order for 100,000 units of inventory from a supplier over the next two years.
C)receives inventory previously ordered.
D)Both answers b and c are correct.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

A liability arises when the firm receives inventory previously ordered, as it now has an obligation to pay the supplier for the goods received.

A Liability Arises When a Firm