All of the following statements regarding uncertainty in liabilities are except:
A) Liabilities can involve uncertainty in whom to pay.
B) A company can create a known amount when issuing a note even though 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.
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 incorrect. A company may record a liability even if it is uncertain about whom to pay or when to pay, as long as the amount owed is estimable. The other statements are correct.

All of the Following Statements Regarding Uncertainty in Liabilities Are