Which of the following is not a characteristic of a liability?
A)It involves a responsibility to another company.
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

The sacrifice involved in a liability may not necessarily contribute to the company's future cash inflows. For example, a company may have a liability to pay rent for a building it is no longer using, which does not directly or indirectly contribute to its future cash inflows.

Which of the Following Is Not a Characteristic of a Liability