a. Briefly explain the essential characteristics in the definition of a liability.
b. What are the criteria that must be satisfied for liabilities to be recognised in the statement of financial position?
c. Using the definition and recognition criteria, explain why the following items are liabilities:
• bank loan
• revenue earned in advance (unearned revenue)
• provision for employees' annual leave

Question

Quizplus · Accepted Answer

The Answer of a. Briefly explain the essential characteristics in the definition of a liability.
b. What are the criteria that must be satisfied for liabilities to be recognised in the statement of financial position?
c. Using the definition and recognition criteria, explain why the following items are liabilities:
• bank loan
• revenue earned in advance (unearned revenue)
• provision for employees' annual leave

A Briefly Explain the Essential Characteristics in the Definition of a Liability