What are the essential characteristics of a liability under the definition in the Conceptual Framework?
i. Settlement requiring an outflow of resources embodying economic benefits.
ii. A present obligation to an external party.
iii. A legal debt.
iv. The obligation must have resulted from past events.
A) i, , iv
B) i, ii, ,iv
C) i, ii, iii
D) ii, iii, iv

Question

Quizplus · Accepted Answer

The essential characteristics of a liability, as per the definition in the Conceptual Framework, include: 
i. Settlement requiring an outflow of resources embodying economic benefits, 
ii. A present obligation to an external party, and 
iv. The obligation must have resulted from past events. 
Therefore, option B consisting of i, ii, and iv is the correct answer. Option A is incorrect as it leaves out the present obligation to an external party (ii). Option C is incorrect as it includes the requirement of a legal debt, which is not always necessary for a liability. Option D leaves out the requirement of an outflow of resources embodying economic benefits (i).

What Are the Essential Characteristics of a Liability Under the Definition