Which of these would not be defined as a liability under the Conceptual Framework?
A) A loan from a financial institution.
B) Money owing to a supplier for goods purchased.
C) Wages owing to employees.
D) An arrangement to pay a bonus commission to salespersons for achieving sales over a certain level.

Question

Quizplus · Accepted Answer

The Conceptual Framework defines a liability as a present obligation arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. The arrangement to pay a bonus commission is not a present obligation as it is dependent on future events (achieving sales over a certain level). Therefore, it would not be defined as a liability. A, B, and C all represent present obligations that meet the definition of a liability.

Which of These Would Not Be Defined as a Liability